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NO.  94-82299 


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Author: 


Massachusetts. 


Title: 


Recommendations  and 
proposed  legislation  as 

Place: 

[Boston] 

Date: 

[1918] 


t^u-'giiqq-s 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION 

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RESTRICTIONS  ON   USE: 


Massacliusettn .     Street  railvmy  investigation 
coEimission, 

•  ..  Recomenclations  and  proponed  legislation 
as  contained  in  the  report   of  the  Street  rail- 
v:ay  investigation  commisGion  on  the  problems 
relating  to  the  street  railways   of  the  comnon- 
wealth.        [Boston,  IQlS'j 


cover-title,   97  p, 


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At  head   of  title:   Senate,   no.   265.  The  common- 
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LIBRARY 


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MAR  ?-  1925 


ljtk>A>4    . 


SENATE 


No.  265 


®l)e  atotnmonweoUl)  of  ittaasacljuactta 


RECOMMENDATIONS  AND  PROPOSED   LEGISLATION 

AS  CONTAINED  IN  THE 

REPORT 


OF  THE 


STEEET  RAILWAY  INVESTIGATION  COMMISSION 


ON  THE 


PROBLEMS  RELATING 


TO  THE 


Street  Eailwats  of  the  Oommonweaith. 


^ 


I 


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in 


THE  STEEET  RAILWAY  INVESTIGATION  COMMISSION. 


From  the  Senate. 

JOSEPH  W.  MARTIN,  Jr.,  Chairman, 
CHARLES  W.  ELDRIDGE. 
JAMES  L.  HARROP. 

From  the  House, 

JOHN  M.  GIBBS. 
GEORGE  M.  WORRALL. 
GEORGE  BUNTING. 
MARTIN  HAYS. 
JOHN  L.  DONOVAN. 
MICHAEL  J.  FITZGERALD. 

From  the  Governor, 

W.  CAMERON  FORBES. 
GURDON  W.  GORDON. 


EDWARD  J.  DUNN,  Clerk. 

June  18  to  Nov.  30, 1917. 
JOHN  B.  BABCOCK,  3d,  Clerk, 
Dec.  1, 1917,  to  Feb.  1, 1918. 


I 


I 


) 


CONTENTS. 


PAOB 

Legislation,     ••.....,..,  7 

Report  of  Commission,    ••......,.  9 

Present  Condition  of  Massachusetts  Street  Railways,       ....  13 

Causes  Leading  up  to  the  Present  Situation, ig 

1.  Depreciation  in  the  Purchasing  Power  of  the  Nickel,         ...  19 

2.  The  Growth  of  the  Automobile  Business,          .....  22 

Privately  Owned  Autos,      ........  22 

Jitneys,    .         .         ' 23 

3.  Taxation  and  Highway  Maintenance  Requirements,          ...  24 

Property  Tax 24 

Corporate  Franchise  Tax, 25 

Commutation  or  Excise  Tax,       .......  36 

Compensation  Tax  (Boston  Elevated),          .....  27 

Requirements  relative  to  Maintenance  and  Repair  of  Highways,     .  28 

4.  Improvements  in  Service,       ........  35 

6.  Non-paying  Lines,         .........  37 

6.  Failure  to  Provide  for  Depreciation  and  Obsolescence,       ...  38 

7.  Lack  of  Co-operation  between  the  Street  Railways  and  the  Public,     .  43 
Conclusions,         •••......,.  46 

Recommendations,       ••••.....,  46 

1.  Jitneys [46 

2.  Autos  operated  by  Street  Railways, 47 

3.  Trolley  Freight, !         !  47 

4.  Taxation  and  Highway  Maintenance,      ......  47 

6.  Alteration  of  Tracks  for  Improved  Equipment,         .  .  .  .47 

6.  Alteration  of  Location  in  Highways,        ......  48 

7.  Alteration  or  Construction  of  Bridges,     ......  48 

8.  Service-at-cost  Plan, 4g 

Acknowledgments,        ..........  52 

Dissenting  Statements,    ..........  54 

Dissenting  Reports, 5(1 

Appendices :  — 

Appendix  A.  —  Proposed  Legislation 95 

1.  An  Act  relative  to  the  Powers  and  Duties  of  the  Public  Service  Com- 

mission,           65 

2.  An  Act  permitting  Street  Railway  Companies  to  use  Motor  Vehicles,  65 

3.  An  Act  relating  to  Street  Railway  Companies  as  Common  Carriers,  .  66 

4.  An  Art  relative  to  the  Taxation  of  Street  Railway  Companies  and  the 

Repair  and  Maintenance  of  Public  Ways  and  Places  in  which 

Street  Railways  are  located,   .......  66 

5.  An  Act  relative  to  the  Alteration  of  Location  of  Tracks  to  provide  for 

Improved  Equipment,     ........  70 

6.  An  Act  relative  to  the  Alteration  of  Location  of  Street  Railway 

Tracks  in  Highways,       ........  72 

7.  An  Act  relative  to  the  Alteration  or  Construction  of  Bridges  upon 

which  Street  Railway  Tracks  are  located  or  are  to  be  located,       .  73 

8  a,  b,  c,  d.  Service-at-cost  Plans  submitted  to  this  Commission,    .         .  74 


©he  Commoniocaltl)  of  £t\as5ac\)ii5tns. 


LEGISLATION. 


Chapter  129  or  the  Resolves  of  1917, 

Resolve  to  provide  for  an  Investigation  by  a  Special  Commission 
OF  Problems  relating  to  the  Street  Railways  of  the  Common- 
wealth. 

Resolved,  That  a  special  commission,  to  consist  of  three  members  of  the 
senate,  to  be  appointed  by  the  president,  six  members  of  the  house  of 
representatives,  to  be  appointed  by  the  speaker,  and  two  persons,  not 
members  of  the  general  court,  to  be  appointed  by  the  governor  with  the 
advice  and  consent  of  the  council,  shall  sit  during  the  recess  of  the  general 
court  to  investigate  and  study  the  various  problems  relating  to  the  control, 
supervision,  regulation,  ownership,  operation,  taxation,  capitalization, 
finance,  management  and  development  of  street  railways  in  this  common- 
wealth, and  to  the  powers,  duties  and  liabilities  of  street  railway  com- 
panies.  The  commission  shall  be  known  as  the  street  railway  investigation 
commission  and  shall  especially  consider  the  following  matters:   the  de- 
velopment of  street  railways  in  such  manner  as  to  provide  for  the  cheaper 
and  quicker  conveyance  of  food,  mcluding  milk,  from  the  country  to  the 
city,  and  of  freight  to  and  from  the  various  railroad  stations  and  wharves; 
the  construction  of  street  railways  in  parts  of  the  state  not  now  served  by 
street  railways  or  other  means  of  transportation;  the  use  of  motor  vehicles 
by  street  railway  companies  as  feeders,  or  otherwise;  the  granting  of  au- 
thority to  cities  and  towns  to  invest  in  the  securities  of  street  railway  com- 
panies, or  otherwise  to  render  financial  assistance  to  such  companies;  the 
ownership  or  operation  of  street  railways  by  the  commonwealth,  or  by  cities 
and  towns;  amendments  of  the  law  relative  to  the  obUgations  of  street 
railway  companies  in  respect  to  the  paving  of  streets  and  the  maintenance 
and  repair  of  ways  and  bridges  in  or  on  which  street  railways  are  operated; 
the  sale  of  commutation  tickets  for  transportation  by  street  railways;  and 
the  taxation  of  street  railway  companies.   The  commission  hereby  provided 
for  shall  be  furnished  with  a  room  in  the  state  house,  and  shall  have  the 
services  of  a  clerk.    The  commission  shall  give  such  pubUc  hearings,  and 
in  such  places,  as  it  may  deem  expedient,  may  administer  oaths,  may 
require  the  attendance  of  witnesses  and  the  production  of  books  and  docu- 
ments, may  be  allowed  such  sums  for  expenses  necessarily  incurred  and 
shall  receive  such  compensation  as  shall  be  approved  by  the  governor  and 
council.    The  conmiission  shall  report  to  the  next  general  court,  not  later 
than  the  second  Wednesday  in  January,  with  drafts  of  such  legislation  as 
it  may  deem  expedient.    [Approved  May  25,  1917. 


i 


Ml 


1 


It 


EEPOET 


OF  THB 


STREET  RAILWAY  INVESTIGATION  COMMISSION 


ON  THE 


STREET  RAILWAYS  OF  THE  COMMONWEALTH. 


The  Street  Railway  Investigation  Commission,  appointed 
under  chapter  129  of  the  Resolves  of  the  year  1917,  has  the 
honor  to  submit  herewith  its  report. 

The  purpose  for  which  this  Commission  was  created  may  be 
outlined  as  follows:  — 

To  investigate  and  study  the  various  problems  relating  to  the  control, 
supervision,  regulation,  ownership,  operation,  taxation,  capitalization, 
finance,  management  and  development  of  street  railways  in  this  Common- 
wealth, and  to  the  powers,  duties  and  liabilities  of  street  railway  companies. 
The  Commission  shall  be  known  as  the  Street  Railway  Investigation  Com- 
mission, and  shall  especially  consider  the  following  matters:  the  develop- 
ment of  street  railways  in  such  manner  as  to  provide  for  the  cheaper  and 
quicker  conveyance  of  food,  including  milk,  from  the  country  to  the  city, 
and  of  freight  to  and  from  the  various  railroad  stations  and  wharves;  the 
construction  of  street  railways  in  parts  of  the  State  not  now  served  by 
street  railways  or  other  means  of  transportation;  the  use  of  motor  ve- 
hicles by  street  railway  companies  as  feeders,  or  otherwise;  the  granting 
of  authority  to  cities  and  towns  to  invest  in  the  securities  of  street  railway 
companies,  or  otherwise  to  render  financial  assistance  to  such  companies; 
the  ownership  or  operation  of  street  railways  by  the  Commonwealth,  or 
by  cities  and  towns;  amendments  of  the  law  relative  to  the  obligations 
of  street  railway  companies  in  respect  to  the  paving  ci  streets  and  the 
maintenance  and  repair  of  ways  and  bridges  in  or  on  which  street  railways 
are  operated;  the  sale  of  commutation  tickets  for  transportation  by  street 
railways;  and  the  taxation  of  street  railway  companies. 

In  pursuance  of  the  resolve,  on  May  25,  1917,  the  President 
of  the  Senate  named  as  members  of  the  Commission  from  the 
Senate  Hon.  Joseph  W.  Martin,  Jr.,  of  North  Attleborough, 
Hon.  Charles  W.  Eldridge  of  Somerville,  and  Hon.  James  L. 
Harrop  of  Worcester;   and  the  Speaker  of  the  House  of  Repre- 


)f 


10  REPORT  ON  STREET  RAILWAYS.  [Feb. 

sentatives  on  the  same  date  named  as  members  of  the  Com- 
mission  from  the  House  Representatives  John  M.  Gibbs  of 
Watham   George  M.  Worrall  of  Attleboro,  George  Bunting  of 

iTl^'l'"'  ^''''  ^^  ^^^'^"'  '^^^'^  L.  Donovan  of  Boston 
and  Michael  J.  Fitzgerald  of  Northampton.  On  June  13  His 
Excellency  the  Governor  of  Massachusetts  appointed  Messrs. 
W.  Cameron  Forbes  of  Norwood  and  Gurdon  W.  Gordon  of 
bprmgfield  members  of  the  Commission. 

The  Commission  organized  on  June  18,  1917;  Senator  Joseph 
W.  Martin  Jr.,  of  North  Attleborough  was  elected  chairman; 
ii^dward  J.  Dunn  of  Boston  was  elected  clerk. 

The  Commission  at  its  first  meeting  decided  on  a  program  of 
public  hearings.  Since  the  entire  street  railway  situation  in  the 
btate  was  to  be  considered,  it  was  thought  best  to  hold  hearings 
m  several  of  the  principal  cities  of  the  Commonwealth. 

The  first  seven  public  hearings  were  held  at  Boston  between 
July  10  and  Sept.  19,  1917.  On  September  26  a  public  hearing 
was  held  m  City  Hall,  Fall  River;  on  September  27  at  City 
Hall  Lawrence;  on  October  2  at  City  Hall,  Pittsfield;  on 
October  3  at  the  Administration  Building,  Springfield;  and  on 
October  4  at  City  Hall,  Worcester. 

Following  those  held  in  the  above  cities  eight  more  hearings 
were  held  in  Boston,  the  last  one  being  on  Dec.  6,  1917     Thus 
twenty  public  hearings  were  held  by  this  Commission,  extending 
over  a  period  of  neariy  six  months;    fifteen  of  these  hearings 

Stlte  '"^  "^  ''''^  ^^'  '°  ''^^""  "^^^"^  throughout  the 

Letters  were  sent  to  the  various  mayors  and  boards  of  select- 
men  boards  of  trade,  granges  and  local  organizations  of  the 
Amalgamated  Association  of  Street  and  Electric  Railway  Em- 
ployees of  America.  The  Commission  urged  these  organizations 
to  study  carefully  the  resolve  under  which  the  Commission  was 
working,  and  mvited  the  coK)peration  of  such  organizations. 
The  Commission  suggested  that  the  problem  be  studied  in  all 
Its  aspects,  so  that  the  representatives  of  these  organizations 
might  appear  before  the  Commission  with  such  recommenda- 
tions  as  they  deemed  expedient. 

In  addition  to  the  letters  of  the  Commission,  hearing  notices 
were  sent  to  the  proper  representatives  of  the  above  organiza- 


1918.] 


SENATE  —  No.  265. 


11 


tions,  keeping  them  posted  as  to  the  date  and  places  at  which 
the  hearings  were  to  be  held. 

The  presidents  of  the  Massachusetts  street  railways  received 
a  letter  from  the  Commission  stating  that  the  Commission  ex- 
pected them  to  submit  their  views  as  to  the  solution  of  the 
street  railway  problems  which  confronted  the  Commonwealth. 

More  than  150  persons  addressed  the  Commission  at  the  pub- 
lic hearings.  Nearly  all  of  the  street  railways  in  Massachusetts 
were  represented  by  their  presidents  or  other  ofiicial  representa- 
tives. Many  of  the  cities  and  towns  throughout  the  State  sent 
officials  to  represent  them  at  these  hearings  and  to  present  their 
views  to  the  Commission.  Some  of  the  speakers  representing 
the  municipalities  requested  permission  to  address  the  Commis- 
sion after  the  street  railways  had  stated  their  case,  and  were 
allowed  to  do  so.  In  addition  to  the  street  railways  and  the 
municipalities  the  Commission  was  addressed  by  persons  repre- 
senting certain  of  the  boards  of  trade,  granges  and  labor  organi- 
zations in  the  State.  Bankers,  trustees  and  others  appeared  be- 
fore the  Commission,  representing  the  viewpoint  of  the  investors 
in  street  railway  securities.  Other  persons  individually  brought 
to  the  attention  of  the  Commission  matters  which  they  con- 
sidered would  aid  in  the  solution  of  the  problem  confronting  the 
street  railways. 

In  addition  to  holding  the  public  hearings  the  Commission  in- 
vited the  representatives  of  cities  and  towns,  organizations  and 
street  railways  to  send  written  communications  explaining  their 
views  on  the  matters  under  consideration. 

•  It  seemed  wise  to  the  Commission  to  look  at  the  street  rail- 
way problem  from  as  broad  a  viewpoint  as  possible,  and  for 
this  reason  an  endeavor  has  been  made  to  collect  considerable 
information  concerning  street  railway  conditions  in  the  United 
States  and  Canada,  and  to  some  extent  in  South  America  and 
in  European  countries.  Appendix  G  contains  information  rela- 
tive to  street  railway  conditions  in  foreign  countries. 

A  questionnaire  was  sent  to  the  public  service  or  other  com- 
mission concerned  with  railway  regulation  in  every  State,  and 
in  each  Province  in  Canada.  This  questionnaire  sought  in- 
formation pertaining  to  franchises,  taxation,  trolley  freight,  pub- 
lic ownership,  rate  regulation,  capitalization  and  similar  matters. 


f 


12 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 

The  information  received  in  answer  to  these  questions  will  be 
found  .n  Appendix  F  of  this  report,  which  deals  with  stre^  Lu 
way  cond,t.o„s  throughout  the  United  States  and  CanaT 

A  similar  series  of  questions  was  sent  to  1,000  cities'  and 
towns  in  the  United  States  requesting  information  of  he  same 
general  cha«»cter.  This  list  included  all  of  the  larger  cftilsb 
the  United  States,  together  with  many  of  the  smallef cittlnd 
towns  picked  at  random.     In  Appendix  F  there  will  Tl^ 

tt  UniSl!  '"'TK"'r  r"™"«  ''^  ''  largest  citllsn 
the  United  States.    The  data  from  aU  the  cities  and  towns  from 

ner  that  the  answer  to  a  particular  question  from  any  city  ^r 
town  may  readily  be  noted.  ^    ^    ' 

anr^Lf  s!"'"™?""  ""*  •"  ''^  "^^  ^"""^"^  '^^^  '"•d  town, 
and  Public  Service  Commissions  was  found  to  be  of  much  value 

he  Commission  also  desired  to  visit  certain  of  the  cities  in  the 

fonnation  by  a  discussion  of  the  conditions  in  those  cities  w^i 
the  representatives  of  the  city  and  the  railway  officials  Z 
-rdingly.  with  the  consent  of  the  Governor  and  CoTn  U.  ^ 
Commission  inspected  the  street  railway  systems  of  New  York 

Deilt^H-  '''''"'''"'•  ^*'''^''"^'  ^''•<=»^'  MUwauk land 
Detroit  m  this  country,  and  Toronto  and  Montreal  in  Canada 

A  brief  account  of  the  inspections  made  in  these  c7ti^  .s  t 
eluded  m  Appendix  B  of  this  report. 

Letters  were  sent  to  the  cities  and  towns  in  both  the  United 
States  and  Canada  owning  or  operating  their  own  street  S 
ways_  Information  contained  in  the  answers  to  these  letters 
together  with  much  information  coUected  from  other  sotS' 
has  been  compded  under  "Municipal  Ownership"  in  App"n2 
E  of  this  report.    Owing  to  the  present  conditions  in  eZ^I 

rectly  from  the  various  foreign  cities  relative  to  the  street  rail- 
way  conditions  The  information  compiled,  therefore,  re  a^^ 
to  foreign  conditions  has  been  obtained  from  the  virions  «! 

artrsl  W°«  ^•'-f  r ''^  ''^--"tion  has  been  obtains! 
at  the  State  and  Boston  Public  Libraries,  the  library  of  the  Pub- 
he  Service  Commission,  the  Boston  Elevated  library  and  ^e 

tZZtZ^''-^^-  ^-^^-^  «^  ^-'-^^  -^  of 


1918.] 


SENATE  —  No.  265. 


13 


One  of  the  problems  which  this  Commission  was  asked  to 
study  was  the  development  of  street  railways  in  such  manner  as 
to  provide  for  the  cheaper  and  quicker  conveyance  of  food,  in- 
cluding milk,  from  the  country  to  the  city,  and  of  freight  to  and 
from  the  various  railroad  stations  and  wharves.  A  considerable 
amount  of  information  was,  therefore,  collected  showing  the 
present  conditions  in  this  State  relative  to  trolley  freight.  In 
this  connection  particular  attention  was  paid  to  the  co-ordina- 
tion of  lines  with  respect  to  street  railway  interchange  points, 
and  connections  between  street  railways  and  steam  railroad 
lines.  This  information  has  been  compiled  mainly  from  replies 
of  street  railways  to  a  questionnaire  sent  out  by  the  Commis- 
sion bearing  on  this  subject.  A  letter  was  also  sent  to  certain 
of  the  dairy  farmers  in  Massachusetts  requesting  information 
as  to  conditions  pertaining  to  the  transportation  of  milk  by  the 
street  railway  companies.  A  detailed  account  of  the  trolley, 
express,  milk  and  freight  service  maintained  in  Massachusetts 
will  be  found  in  Appendix  D. 

Appendix  C  of  this  report  contains  a  compilation  of  statistics 
relative  to  Massachusetts  street  railways.  These  statistics  give 
much  data  concerning  the  growth,  operating  results,  capitaliza- 
tion, taxes,  etc.,  with  comparative  figures  in  some  cases  for 
railways  outside  of  Massachusetts. 

Present  Condition  op  Massachusetts  Street  Railways. 

The  situation  facing  the  street  railways  in  Massachusetts  at 
the  present  time  is  critical  and  most  unsatisfactory  both  to  the 
street  railways  and  to  the  public.  The  public  is  not  receiving 
the  service  to  which  it  is  entitled,  and  the  investors  in  street 
railway  securities  are  not  receiving  a  return  commensurate  with 
the  investments  which  they  have  made.  The  financial  diffi- 
culties in  which  the  street  railways  find  themselves  may  be  at- 
tributed to  several  factors.  Some  of  these  are  directly  traceable 
to  the  war,  but  there  are  still  other  and  probably  greater  fac- 
tors, not  likely  to  be  temporary  in  their  nature,  requiring  con- 
sideration and  probably  remedial  legislation. 

The  result  of  the  hearings  and  other  investigations  carried  on 
by  this  Commission  has  brought  forth  the  fact  that  the  invest- 
ing public  has  largely  lost  confidence  in  street  railway  securities. 


14 


REPORT  ON  STREET  RAILWAYS.  [Feb.      I     1918.] 


SENATE  —  No.  265. 


15 


It  IS  evident  that  the  street  raiWays  of  Massachusetts  are  not 
prosperous,  except  perhaps  in  a  few  isolated  cases.  The  follow- 
ing comparative  figures  of  the  financial  statistics  of  the  Massa- 
chusetts street  railways  as  a  whole  will  illustrate  this 

SsfL^S^'^TK  '"'^'"^•^"°«  30.  1911,  the  gross  earnings  were 
»^5,000  000,  the  operating  expenses  $23,000,000,  the  net  eam- 

and  the  dividends  declared  amounted  to  14,750,000.  an  averag^ 
ratio  of  dividends  to  capital  stock  of  5J  per  cent.  For  the  year 
ending  June  30,  1916.  the  gross  earnings  had  increased  to 
nearly  $41,500,000,  an  increase  of  18|  per  It.  sinc^ Til  The 
operating  expenses  had  reached  $29,000,000.  representing  an 
increase  of  26  per  cent.    The  net  earnings  remained  the  same 

um'^j.''''^''^ ''''  ''''■  "^^  '^'^^'^  decia^d  ;:^ 

1911  of  $750,000.  The  average  ratio  of  dividends  to  capital 
t  .T.oT  ""  '''''''''  ^'°-  '  P-  -"*•  In  this  same 
$192,000,000  to  more  than  $226,000,000,  an  increase  of  over  18 

^fi  ^n  n«  J     ^"^^^  '^"^^  •""'^'''"^  •l'"in«  tWs  period  from 
$86,500,000  to  $102,500,000,  an  increase  of  18  per  cent.    Z 

noted  above  the  dividends  in  1916  were,  however,  actually  less 

by  nearly  $750,000  than  those  declared  in  1911.  showing  a  drop 

in  the  average  ratio  of  dividends  to  capital  stock  from  5}  to 

4  per  cent.    Further  illustrations  could  be  given,  but  it  sLs 

$750,000  m  dividends  declared  during  a  six-year  period  when 
the  capital  stock  had  increased  by  $16,000,000  proves  the  case 
During  the  calendar  year  of  1917  the  Boston  Elevated  had  a 
gross  revenue  of  $19,700,000,  an  increase  of  $400,000  over  the 
preceding  year  The  operating  expenses,  however,  increased  at 
a  aster  rate  than  the  gross  earnings,  the  result  being  that  the 
1917  net  earnings  were  less  than  those  of  1916.    As  a  result  the 

stock  of  $23,789,400.  whereas  in  1916  the  road  earned  about 
4.9  per  cent,  on  its  capital  stock. 

reZt^  Tr''  '"  ^^^  '*'""*  ""^^'"y  «^^""ties  have  become 

K    t.''  TT7  u  t'"^  ^'  '^'  '^"^''  P"<*  °f  the  «tock. 
In  1911  the  stock  of  the  Boston  Elevated  Railway  ranged  from 


103^  to  124|,  and  in  the  summer  of  1917  it  stood  at  61.  West 
End  preferred,  having  a  par  value  of  $50  a  share,  and  a  guar- 
anteed dividend,  ranged  from  100  to  105  in  1911,  and  was 
quoted  at  63  in  July,  1917.  Springfield  Railway  Company  pre- 
ferred, which  was  quoted  at  93  to  96  in  1911,  was  quoted  at 
54J  on  April  25,  1917.  During  the  past  six  months  the  stocks 
have  receded  still  further,  the  Boston  Elevated  touching  the  low 
point  of  27  in  December,  and  the  West  End  preferred  going  as 
low  as  45  in  the  same  month.  The  Commission  has  stated 
earlier  in  this  report  that  prevailing  war  conditions  have  had 
their  effect  on  the  present  outlook  of  the  street  railways,  and  it 
is  true  that  the  extremely  low  quotations  mentioned  for  Decem- 
ber, 1917,  are  partly  due  to  war  conditions.  These  war-time 
prices  do  not  fairly  represent  the  value  of  the  properties  con- 
cerned. The  marked  depreciation  in  the  securities  extending 
over  the  six-year  period  from  1911  to  1917  is,  however,  signifi- 
cant, and  proves  that  these  street  railway  securities  are  now  in 
disfavor.  Consequently  the  street  railways  are  in  no  position  to 
raise  additional  capital,  no  matter  how  urgently  needed. 

Under  Massachusetts  laws  capital  stock  cannot  be  issued  for 
less  than  the  par  value  paid  in  in  cash.  As  the  stock  of  most 
of  the  roads  is  selling  for  less  than  par,  no  further  money  can  be 
raised  by  the  sale  of  stock. 

Under  Massachusetts  laws,  again,  the  total  amount  of  bonds 
which  may  be  issued  can  in  no  case  exceed  the  amount  of  capi- 
tal stock  and  premiums  paid  in.  A  study  of  the  balance  sheets 
of  the  various  companies  will  show  that  substantially  all  of 
them  have  issued  their  maximum.  It  is  unsound  financially, 
and  also  almost  impossible  as  a  matter  of  practice,  to  borrow  on 
short-time  notes  or  at  the  banks. 

Thus  the  street  railways  are  unable  to  undertake  improve- 
ments, extensions  and  the  purchase  of  modern  equipment.  The 
public  demands  additional  facilities,  modern  and  up-to-date 
equipment,  and  the  increase  in  our  population  requires  a  pro- 
portionate growth  in  the  mileage  and  equipment  of  our  street 
railways.  The  street  railways  in  Massachusetts  have  increased 
their  gross  investment  from  $95,000,000  in  1900  to  $145,000,000 
in  1905,  to  $192,000,000  in  1911,  and  finally  to  nearly  $227,000,- 
000  in  1916.    The  problem  is  not  merely  a  question  of  placing 


r:rraa. 


16 


REPORT  OX  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


17 


the  roads  in  such  a  position  that  they  can  meet  current  ex- 
penses; they  must  also  be  in  such  financial  condition  that  they 
can  add  to  their  investment  a  sum  of  from  $7,000,000  to 
$10,000,000  annually.  Only  by  this  increase  in  money  invested 
can  the  companies  hope  to  meet  the  ever-growing  demands  for 
increased,  quicker  and  more  comfortable  transportation  facili- 
ties. Money  for  these  purposes  can  be  derived  from  two 
sources,  —  viz.,  by  additional  capital  or  from  net  earnings.  In 
the  latter  case  these  improvements  will  be  made  from  net  earn- 
ings only  when  a  surplus  remains  after  the  payment  of  reason- 
able dividends.  Were  the  security  owners  to  be  deprived  of  all 
return  on  their  capital  in  order  to  provide  for  extensions  the 
result  would  be  to  place  the  street  railway  securities  in  such  a 
position  that  no  new  issues  could  be  floated. 

The  transportation  lines  in  the  vicinity  of  Boston  form  a  large 
proportion  of  the  Massachusetts  street  railways,  as  is  sho^m  by 
the  fact  that  the  gross  earnings  of  the  Boston  Elevated,  includ- 
ing its  leased  lines,  for  the  year  ending  June  30,   1916,  was 
$18,687,000  out  of  a  total  for  the  State  of  $41,479,000.    In  the 
calendar  year  of  1917  the  gross  earnings  of  the  Boston  Elevated 
amounted  to  nearly  $20,000,000.    Thus  the  gross  revenue  of  the 
Boston  Elevated  lines  represents  45  per  cent,  of  the  gross  rev- 
enue of  the  entire  38  street  railways  operating  throughout  the 
State.    Boston  formerly  occupied  a  unique  but  fortunate  posi- 
tion as  compared  with  other  cities  in  the  United  States.    The 
statement  has  been  made,  and  this  Commission  believes  cor- 
rectly, that  Boston  is  the  only  large  city  in  the  country  which 
has  kept  its  transportation  facilities  abreast  of  the  increase  in 
population.     It  should  be  remembered  that  Boston  became  a 
pioneer  in  the  field  of  rapid  transit  service  when  it  opened  the 
Tremont  Street  subway.    If  at  times  it  has  seemed  that  Bos- 
ton's rapid  transit  facilities  have  not  been  laid  out  with  the 
greatest  efficiency,   or  the  lines  co-ordinated   sufficiently,   the 
fact  should  be  borne  in  mind,  first,  that  the  geographical  situa- 
tion here  constitutes  an  extremely  difficult  problem,  and  second, 
that  this  city  has  led,  while  others  have  merely  followed,  and 
thus  mistakes  incident  to  this  pioneer  work  of  rapid  transit 
development  were  undoubtedly  made. 

If,  therefore,  Massachusetts  still  desires  continuing  increased 


and  better  service,  the  street  railways  must  be  placed  in  a  posi- 
tion where  they  can  be  reasonably  expected  to  meet  the  urgent 
demands  of  the  present  and  the  future  generation. 

One  of  the  fundamental  difficulties  which  confronts  the  whole 
street  railway  situation  is  the  fact  that  neither  the  street  rail- 
ways  nor  the  public  have  recognized  the  fact  that  the  street 
railway  business  is  a  partnership  in  which  the  entire  community 
is  interested.  The  interest  of  the  public  is  derived  from  three 
principal  sources.  The  first,  and  the  one  which  reaches  the 
largest  public,  is  as  the  user  of  the  street  railway.  In  1916  al- 
most 800,000,000  passengers  were  carried  on  the  street  railways 
of  Massachusetts,  which  was  equivalent  to  more  than  200 
yearly  rides  per  inhabitant.  This  transportation  convenience  is 
so  universal  that  it  reaches  to  the  heart  of  our  entire  social  and 
economic  system,  and  is  so  important  that  it  can  be  put  down 
as  axiomatic  that  the  street  railway  service  must  be  maintained, 
must  be  extended  and  must  continue  to  improve. 

The  second  aspect  of  this  public  partnership  is  through  the 
ownership  of  street  railway  securities.  Thousands  of  residents 
of  this  Commonwealth  own  stocks  and  bonds  of  the  street  rail- 
ways. Millions  of  these  securities  are  purchased  by  savings 
banks,  insurance  companies  and  other  institutions,  and  the  value 
of  these  securities  thus  has  a  direct  bearing  on  the  property 
of  every  depositor  in  savings  banks  and  on  the  holders  of  insur- 
ance policies. 

The  third  aspect  is  that  of  the  owners  of  property  along  the 
lines  served  by  the  railway.  It  is  a  well-known  fact  that  real 
estate  served  by  adequate  street  railway  facilities  is  much  more 
readily  salable,  and  commands  a  higher  price,  than  real  estate 
not  so  served.  The  interest  of  the  property  holders  is  so  patent 
that  if  an  effort  is  made  to  tear  up  a  street  railway  and  sell  it  as 
junk,  the  owners  of  property  along  the  line  are  apt  to  band  to- 
gether to  save  the  railway,  and  the  towns  interested  generally 
take  vigorous  action  to  keep  the  railway  in  operation.  An  in- 
stance of  this  is  the  case  of  the  Swansea  &  Seekonk  Street  Rail- 
way. The  Providence  &  Fall  River  Street  Railway,  after  an 
unsuccessful  career,  was  finally  sold  at  auction.  Local  persons, 
however,  were  so  interested  in  the  continuance  of  this  line  as 
an  operating  property  that  they  repurchased  the  property  of 


••■Il 


t 


18 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


this  railway,  and,  securing  new  charter  rights,  have  placed  the 
line  in  operation  within  the  last  month  or  two. 

The  Taunton  &  Pawtucket,  which  had  been  operated  by  a 
receiver,  was  sold  a  short  time  ago.  At  the  present  time  vigor- 
ous efforts  are  being  made  in  the  locality  formerly  served  by 
this  line  to  save  this  property  from  being  sold  as  junk,  so  that 
it  may  be  put  in  operation  again.  The  patrons  have  voluntarily 
paid  higher  fares  than  those  scheduled,  and  it  looks  as  though 
this  road  would  be  purchased  back  from  the  company  which 
had  intended  to  junk  it,  and  would  be  kept  in  operation  after 
all. 

Recently  certain  other  small  roads,  such  as  the  Norwood, 
Canton  &  Sharon,  the  Ware  &  Brooldield,  and  the  Nahant  & 
Lynn  have  threatened  to  cease  operations  entirely,  owing  to  the 
apparently  hopeless  problems  before  them.  The  Bay  State,  the 
largest  system,  so  far  as  mileage  is  concerned,  in  this  State,  and 
one  of  the  largest  systems  in  the  United  States,  has  just  been 
placed  in  the  hands  of  a  receiver. 

The  street  railway  problem  is,  therefore,  not  an  academic  one, 
but  is  eminently  practical.  Does  the  Commonwealth  wish  to 
have  its  street  railways  maintain,  extend  and  improve  their 
service?  If  so,  there  must  be  a  broadened  understanding  by  all 
concerned,  and  the  principle  that  the  public  and  the  street  rail- 
ways should  of  necessity  be  partners  for  the  common  weal  must 
be  kept  in  mind.  This  Commission  believes  that  only  through 
such  a  leavening  of  thought  can  equitable  legislation  be  pro- 
vided which  will  bring  the  street  railways  up  to  the  standards 
desired. 

Causes  leading  up  to  the  Present  Situation. 

As  a  result  of  its  investigation  this  Commission  believes  that 
the  following  causes  have  contributed  to  the  present  unsatis- 
factory situation  relative  to  the  street  railways  in  this  Common- 
wealth. No  attempt  has  been  made  to  give  these  causes  in  the 
order  of  their  importance,  since  the  individual  railways  are 
affected  in  varying  degrees  by  the  different  causes. 

1.  Depreciation  in  the  Purchasing  Power  of  the  Nickel. 

2.  Growth  of  the  Automobile  Business. 

3.  Taxation  and  Highway  Maintenance  Requirements. 


1918.] 


SENATE  —  No.  265. 


19 


4.  Improvement  of  Facilities. 

5.  Non-paying  Lines. 

6.  Failure  to  provide  for  Depreciation  and  Obsolescence. 

7.  Lack  of  Co-operation  between  the  Street  Railways  and  the  Public. 

1.     Depreciation  in  the  Purchasing  Power  of  the  Nickel, 

During  the  past  twenty  years  the  cost  of  labor  and  material 
has  risen  considerably.  The  "platform  expense,"  that  is,  the 
wages  paid  to  motormen  and  conductors,  has  risen  greatly  in 
this  period.  During  the  ten  years  from  1897  to  1907  the  hourly 
rates  increased  by  about  25  per  cent.;  in  the  next  period,  from 
1907  to  1917,  the  increase  was  from  30  to  50  per  cent.,  giving  a 
total  percentage  increase  for  the  twenty-year  period  from  1897 
to  1917  of  from  60  to  80  per  cent. 

During  the  ten  years  between  1897  and  1907  the  cost  of  coal 
increased  10  to  20  per  cent.,  and  from  1907  to  1917  it  has  in- 
creased in  many  cases  by  as  much  as  100  per  cent.  The  1917 
figures  for  the  cost  of  coal  should  be  taken  with  caution,  since 
they  are  due  to  war  conditions,  and  it  is  uncertain  to  what  ex- 
tent the  price  will  recede  when  normal  conditions  are  again 
reached.  The  cost  of  rails  increased  from  1897  to  1907  by  from 
30  to  50  per  cent.,  and  from  1907  to  1917  by  from  50  to  100 
per  cent,  in  many  cases.  Again,  the  war  prices  for  steel  do  not 
represent  permanent  conditions.  Other  material  used  in  con- 
nection with  tracks,  equipment,  power  plants,  etc.,  has  in- 
creased correspondingly. 

Twenty  years  ago  the  street  railway  outlook  appeared  prom- 
ising, and  promoters  were  anxious  to  build  electric  railways  in 
all  directions.  At  that  time  there  appeared  little  likelihood  of 
a  fare  higher  than  5  cents  ever  becoming  necessary.  For  this 
reason,  in  1897  the  Boston  Elevated  was  granted  its  charter  by 
the  State,  providing  that  it  should  not  charge  for  a  period  of 
twenty-five  years  from  that  date  a  fare  in  excess  of  5  cents. 
In  the  case  of  most  of  the  other  street  railways  the  fare  was  not 
limited  by  charter,  and  the  companies  could  in  a  general  way 
increase  fares  at  their  own  volition  until  1913.  Since  that  time 
the  Public  Service  Commission  has  had  control  over  street 
railway  fares. 

In  the  hearings  before  this  Commission  the  representatives  of 
the  street  railways  stated  that  they  believed  that  the  present 


|::i] 


20 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


method  of  rate  regulation  by  the  Public  Service  Commission 
was  not  satisfactory.  Under  the  Railroad  Commission  the  rail- 
ways were  allowed  to  establish  their  own  rates,  subject,  to  some 
extent,  to  the  regulation  of  the  Railroad  Commission.  From 
1871  to  1898  the  commission  could,  upon  petition,  revise  and 
regulate  fares  established  by  the  company,  with  the  limitation, 
however,  that  the  fares  should  not,  without  the  consent  of  the 
company,  "be  so  reduced  as  to  yield  ...  an  income  of  less 
than  10  per  cent,  upon  the  actual  cost  of  the  construction  of 
its  roads  and  the  purchase  of  property  for  its  necessary  use,  to 
be  determined  by  the  said  Board.'*  In  1898  this  limitation  was 
changed  so  that  fares  should  not  be  reduced  below  the  average 
rate  of  fare  charged  for  service  by  other  street  railway  com- 
panies, which  in  the  judgment  of  the  Commission  are  operated 
under  substantially  the  same  conditions.  In  1901  the  statutes 
were  changed  to  such  an  extent  that  the  Railroad  Commissioners 
could  merely  recommend  changes,  but  could  not  compel  them. 

In  1913,  however,  the  powers  of  the  Railroad  Commission 
were  transferred  to  a  new  body,  —  the  Public  Service  Commis- 
sion. This  commission  may,  either  upon  complaint  or  upon  its 
own  motion,  hold  public  hearings  and  make  an  investigation  as 
to  the  propriety  of  any  change  of  rates.  Pending  such  an  in- 
vestigation and  decision  the  commission  is  given  power  to  sus- 
pend the  taking  effect  of  such  changes,  but  not  for  a  longer 
period  than  ten  months  beyond  the  time  when  such  changes 
would  otherwise  take  effect.  The  burden  of  proof  to  show 
that  such  increase  is  necessary  in  order  to  obtain  a  reasonable 
compensation  for  the  serv^ice  rendered  is  placed  upon  the  car- 
rier. Since  1913  there  have  been  approximately  twenty  street 
railway  rate  cases  before  the  Public  Service  Commission.  A 
decision  has  been  rendered  on  these  cases  in  times  varying  from 
forty-seven  to  three  hundred  and  seventy-nine  days,  the  aver- 
age being  somewhat  over  four  months. 

The  street  railways  have  stated  before  this  Commission  that 
they  desire  legislation  which  will  give  to  them  the  power  to  fix 
their  own  rates,  and  to  the  Public  Service  Commission  author- 
ity to  revise  and  regulate  the  charges  so  established  by  a  street 
railway  company,  with  a  provision  that  these  fares  should  not 
be  reduced  below  a  point  enabling  the  company  to  earn  upon 


the  actual  amount  of  investment  in  its  property  such  a  rate  of 
return,  to  be  designated  in  the  statute,  as  will  enable  the  com- 
pany to  sell  additional  capital  stock  from  time  to  time  at  par. 

While  discussing  fare  changes  it  may  be  interesting  to  note 
that  Massachusetts  is  the  home  of  the  6-cent  fare.  On  April 
13,  1905,  the  Warren,  Brookfield  &  Spencer  raised  its  fare  to 
6  cents,  being  the  first  company  in  the  country  to  adopt  this 
unit.  In  the  period  since  1913  the  Public  Service  Commission 
has  permitted  about  one-half  of  the  operating  companies  in  the 
State  to  make  an  increase  in  fares.  In  certain  of  these  cases 
the  companies  were  given  precisely  what  they  originally  sought, 
or  else  voluntarily  accepted,  while  in  other  cases  partial  in- 
creases were  allowed.  Several  street  railways  in  the  State  have 
7-cent  units,  and  certain  ones  8-cent  units.  At  the  present 
time,  out  of  a  total  of  2,198  miles  of  trolley  line  in  the  State, 
excluding  the  Boston  Elevated  system,  the  unit,  of  cash  fare 
is  5  cents  on  904  miles,  6  cents  on  1,110  miles,  7  cents  on  85 
miles,  8  cents  on  32  miles,  and  on  67  miles  the  rate  of  2  cents 
per  mile  prevails. 

Appendix  F  includes  a  list  of  all  electric  railway  fare  increases 
in  the  United  States  and  Canada  from  Jan.  1,  1914,  to  Dec.  1, 
1917.  The  listed  increases  number  128,  affecting  100  companies, 
several  of  which  have  made  increases  of  different  kinds  or  at 
different  times,  or  both.  Massachusetts  is  probably  further 
advanced  than  any  other  State  in  the  country  in  the  matter  of 
increased  fares,  the  conventional  5-cent  fare  applying  to  only 
30  per  cent,  of  the  entire  mileage  in  the  State,  and  to  41  per 
cent,  of  the  mileage  exclusive  of  the  Boston  Elevated,  which 
system  is  limited  by  charter  to  a  5-cent  fare.  This  information 
shows  that  Massachusetts  has  not  been  backward  in  the  matter 
of  fare  increases. 

It  is  to  be  remembered  that  costs  in  Massachusetts  are  higher 
than  in  some  other  parts.  Coal  has*  to  come  from  a  distance, 
whereas  in  many  States  water  power  is  available  to  run  the 
street  railways.  Labor  is  not  less  here,  and  expenses  due  to 
winter  weather  are  high. 

To  what  extent  the  method  of  rate  regulation  now  in  vogue 
has  affected  the  value  of  the  street  railway  securities  there 
seems  room  for  a  reasonable  doubt.     A  study  of  the  methods 


22 


RErORT  OX  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  -  No.  265. 


23 


of  rate  regulation  in  various  States  throughout  the  country 
shows  that  the  present  method  of  regulation  in  Massachusetts 
has  its  equivalent  in  at  least  half  of  the  other  States.  The  sus- 
pension clause,  which  is  an  important  feature  of  this  system, 
was  adopted  by  Congress  in  its  Federal  Interstate  Commerce 
Law  in  1910. 

It  does  not  appear  that  the  fares  in  Massachusetts  or  in  any 
State  have  increased  in  the  same  ratio  as  the  labor  and  mate- 
rial expenses,  and  it  would  probably  not  be  advisable  to  make  a 
proportionate  increase  in  fares.  Increased  fares  are  seldom 
productive  of  corresponding  increases  in  gross  revenue.  When 
fares  are  increased  there  is  usually  a  reduction  in  the  number 
of  passengers  carried.  There  is,  then,  a  limit  to  increases  of 
fares. 

This  Commission  was  not  charged  with  the  duty  of  studying 
the  question  of  street  railway  fares,  but  it  has  been  obliged  to 
make  some  investigation  of  this  subject  in  order  to  determine 
to  what  extent  the  present  conditions  of  the  street  railways 
can  be  traced  to  the  rate  of  fares.  This  Commission  is  not 
prepared  to  make  any  specific  recommendations  relative  to  in- 
creased fares.  It  is,  however,  of  the  opinion  that  other  causes 
than  the  present  method  of  rate  regulation  have  contributed  in 
large  measure  to  the  depreciation  of  the  value  of  street  railway 
securities.  It  is  no  doubt  true  that  a  fare  which  was  allowed 
in  1897  could  not  be  expected  to  provide  the  same  dividend 
return  under  1917  conditions.  The  Commission  believes  that  a 
better  understanding  between  the  street  railway's  and  the  public 
will  do  more  to  improve  the  conditions  than  a  straight  increase 
of  fare  with  no  increased  co-operation. 

2.     The  Growth  of  the  Automobile  Business, 

This  subject  should  be  treated  under  two  heads:  — 

(1)  The  privately  owned  automobile  which  carries  passen- 
gers, not  for  hire,  some  of  whom  would  otherwise  ride  on  the 
street  cars. 

(2)  The  so-called  jitney,  which  enters  into  direct  competition 
with  the  street  railways. 

(1)  Privately  owned  Autos.  —  The  advent  of  the  automobile 
has  been  one  of  those  circumstances  which  no   human  mind 


could  foresee.     In  this  connection  the  following  figures  are  of 
interest :  — 

In  1910,  31,360  automobiles  were  registered  in  this  State, 
including  commercial  trucks  and  vehicles,  but  excluding  dealers' 
cars. 

In  1912  the  number  was  50,132. 

In  1915  the  number  was  102,633. 

In  1916  the  number  was  136,809. 

In  1917  the  number  was  174,274. 

Of  this  last  number,  147,310  were  mainly  passenger  cars,  i.e., 
with  trucks  and  commercial  vehicles  excluded.  Assuming  that 
each  of  these  cars  takes  away  from  the  revenue  of  the  street 
railways  one  round-trip  ride  per  day,  paying  a  5-cent  fare  each 
way,  the  loss  in  street  car  revenue  in  a  year  in  this  State  would 
be  about  $5,000,000,  or  nearly  $15,000  per  day.  It  is  estimated 
that  a  private  auto  would  represent  two  fares  per  day,  which 
would  otherwise  be  paid  on  the  cars.  Any  one  watching  the 
stream  of  cars  morning  and  night  through  the  streets  of  Boston 
which  lead  to  the  business  center  will  probably  agree  that  such 
cars  must  represent  a  material  loss  of  revenue  to  the  Boston 
Elevated.  The  question  of  just  how  many  dollars  are  thus  di- 
verted from  the  treasury  of  the  company  is  a  matter  impossible 
to  estimate  exactly.  The  above  estimate  of  $5,000,000  per  year 
appears  reasonable.  In  addition  to  the  private  autos  there  are 
about  10,000  motorcycles  licensed  in  this  State,  which  also 
means  a  loss  in  revenue  to  the  street  railways.  The  large 
number  of  automobiles  also  causes  a  material  delay  to  traflSc 
at  important  street  intersections. 

(2)  Jitneys,  —  The  jitney  represents  a  different  phase  of  the 
automobile  situation.  In  the  jitney  the  street  railway  has  a 
direct  competitor  for  fares.  The  jitney  operates  in  the  same 
general  territory  as  the  street  railway,  picking  off  the  cream  of 
the  traffic  (such  as  the  short-haul  business),  operating  in  many 
cases  only  under  favorable  weather  conditions,  and  often  with- 
out a  bond  sufficient  to  protect  either  the  pedestrian  or  the 
passengers  in  the  case  of  accidents.  The  jitneys  often  pay  li- 
censes locally,  but  in  many  cases  not  proportionate  to  their 
privileges.  In  this  State  the  jitneys  have  not  been  declared 
common  carriers,  and  are  therefore  not  subject  to  the  regula- 


[i 


24 


REPOllT  ON  STREET  RAILWAYS. 


[Feb. 


1918.) 


SENATE  —  No.  265. 


25 


tion  of  the  Public  Service  Commission.  Certain  cities  and 
towns  have  bonded  the  jitneys  so  that  the  public  is  reasonably 
protected.  As  a  general  rule,  however,  it  is  not  believed  that 
these  jitneys  are  so  bonded. 

The  street  railway  companies  are  thus  subjected  to  a  more  or 
less  unfair  competition,  by  which  the  jitneys  can  operate  in 
general  how,  when  and  where  they  please,  without  having  any 
particular  responsibility  in  return  for  their  rights  to  engage  in 
the  transportation  business.  The  street  railways,  however, 
must  maintain  their  service,  under  all  conditions  of  weather,  in 
a  manner  satisfactory  to  the  general  public,  and  under  the 
supervision  and  regulation  of  the  Public  Service  Commission. 
Recently  jitney  competition  has  been  so  severe  that  the  Nahant 
&  L\Tin  has  threatened  to  cease  operations  unless  the  city  will 
revise  the  conditions  under  which  jitneys  are  allowed  to 
operate. 

3.     Taxation  and  Highway  Maintenance  Requirements, 

Before  proceeding  with  a  discussion  of  the  relative  merits  and 
defects  of  the  present  system  of  taxation  of  the  street  railways 
of  this  State,  it  will  probably  be  well  to  outline  concisely  the 
general  features  of  the  present  system.  All  of  the  street  rail- 
ways in  Massachusetts  are  taxed  under  the  same  conditions, 
with  the  exception  of  the  Boston  Elevated  and  its  leased  lines. 

The  general  system  of  taxation  in  Massachusetts  includes 
three  taxes:  (1)  property  tax,  (2)  corporate  franchise  tax  (in- 
cluding an  additional  corporate  franchise  or  excess  tax),  and 
(.3)  commutation  or  excise  tax.  In  the  case  of  the  Boston  Ele- 
vated the  commutation  tax  is  not  assessed.  There  are,  of 
course,  in  addition  certain  Federal  and  miscellaneous  taxes,  but 
these  are  relatively  small,  and  need  not  be  considered  further 
in  this  discussion.  . 

(1)  Property  Tax.  —  This  tax  is  assessed  on  real  estate  and 
machinery  by  the  local  authorities.  The  value  of  the  rails, 
wires,  poles,  etc.,  in  public  highways  are  not  taxed  as  property, 
as  these  items  are  included  in  the  value  of  the  corporate 
franchise. 

The  tax  paid  on  property  in  this  State  by  the  street  railways 
in  1916  amounted  to  about  $890,000.     This  tax  was  paid  on 


property  which  had  an  assessed  valuation  of  about  $45,780,000. 
These  figures  represent  an  average  rate  throughout  the  cities 
and  towns  having  taxable  railway  property  of  $19.40  per  thou- 
sand. Of  this  tax  the  amount  not  assignable  to  railway  opera- 
tion amounts  to  approximately  $71,000,  representing  over 
$3,500,000  worth  of  property.  Tables  XVII.  and  XX.  in 
Appendix  C  show  in  some  detail  the  property  taxes  paid  by  the 
street  railways  of  this  State  in  1916. 

(2)  Corporate  Franchise  Tax.  —  This  tax,  which  is  assessed  by 
the  State  Tax  Commissioner,  is  determined  by  ascertaining  the 
fair  cash  value  of  the  capital  stock,  which  is  taken  to  represent 
the  true  value  of  the  corporate  franchise.  From  such  value 
there  is  then  deducted  — 

(a)  So  much  of  its  capital  stock  as  is  proportional  to  that 
part  of  its  line  lying  outside  the  Commonwealth. 

(b)  The  value  of  its  works,  structures,  reat  estate,  machinery, 
etc.,  subject  to  local  taxation  within  the  Commonwealth.  For 
this  purpose  the  Tax  Commissioner  may  take  the  value  at 
which  such  real  estate  and  machinery  is  assessed  locally,  but 
such  local  assessment  is  not  to  be  taken  as  conclusive  of  the 
true  value. 

After  these  deductions,  (a)  and  (6),  the  amount  remaining  is 
known  as  the  corporate  excess,  and  upon  this  the  tax  is  assessed, 
the  rate  being  the  same  as  that  taxed  on  all  corporations 
throughout  the  State.  The  tax  collected  from  each  railway 
company  is  apportioned  among  the  cities  and  towns  in  propor- 
tion to  the  length  of  tracks  operated  in  the  respective  cities  and 
towns.  The  share  of  the  tax  in  proportion  to  the  mileage  upon 
State  boulevards,  parks  and  reservations  is  retained  by  the 
State  and  credited  to  the  sinking  fund  of  the  loan  to  which  the 
expenditure  for  the  particular  State  boulevard,  park  or  reserva- 
tion was  charged.  The  money  apportioned  to  the  municipali- 
ties is  to  be  used  for  the  repair  and  maintenance  of  the  public 
ways  and  the  removal  of  snow  therefrom. 

The  corporate  franchise  tax  assessed  on  street  railways  for 
1917  is  $571,533.  This  tax  is  based  on  a  rate  of  $19.47  per 
thousand  on  a  corporate  excess  of  $29,354,658.  The  market 
value  of  the  capital  stock,  as  determined  as  of  April  1,  1917,  by 
the  Tax  Commissioner,  is  $74,756,009.     As  noted  above  the 


'i 


26 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


corporate  excess  is  obtained  for  each  street  railway  by  deducting 
items  (a)  and  (b)  from  the  market  value  of  the  capital  stock. 
The  corporate  franchise  tax  assessed  has  declined  very  greatly 
since  1911,  when  it  was  at  its  maximum,  namely,  $1,236,855. 
At  that  time  (1911)  the  tax  rate  was  $17.93  per  thousand  on  a 
corporate  excess  of  $68,982,468.  The  market  value  of  the  capi- 
tal stock  at  that  time  was  $105,298,052,  and  the  par  value  was 
$86,600,000.  In  1916  the  market  value  was  $82,962,054,  while 
the  par  value  was  about  $102,500,000.  In  1916  the  corporate 
franchise  tax  was  $732,253,  while  it  was  only  $571,533  in  1917. 
Thus  the  stock  has  been  continually  decreasing  in  market 
value,  and  the  corporate  franchise  tax  has  diminished  propor- 
tionately. For  1917  it  is  less  than  half  what  it  was  in  1911. 
For  many  individual  railways  the  tax  is  nil. 

An  additional  corporate  franchise  tax  sometimes  called  an 
excess  tax,  is  to  be  assessed  by  the  Tax  Commissioner  whenever 
an  operating  street  railway  company  has  paid  in  the  aggregate 
during  the  year  dividends  exceeding  8  per  cent,  on  the  capital 
stock.  The  additional  tax  for  every  such  year  shall  be  an 
amount  equal  to  such  excess,  except  that  this  tax  shall  not  be 
imposed  unless  the  company  has,  since  the  date  it  commenced 
operating,  paid  dividends  equivalent  in  the  aggregate  to  at 
least  6  per  cent,  upon  its  capital  stock  from  year  to  year. 

The  Tax  Commissioner  states  that  no  such  tax  has  been  paid 
by  any  street  railway  in  recent  years,  and  probably  no  street 
railway  has  ever  paid  a  tax  under  this  "excess"  proviso. 

(3)  Commutation  or  Excise  Tax.  —  The  commutation  tax, 
more  commonly  known  as  the  excise  tax,  is  assessed  locally  on 
the  various  street  railway  companies.  This  tax,  like  the  portion 
of  the  franchise  tax  distributed  among  the  cities  and  to\nis,  is 
supposed  to  be  used  for  the  repair  and  maintenance  of  highways 
and  for  the  removal  of  snow  therefrom.  The  excise  tax  of  a 
street  railway  as  assessed  in  any  city  or  town  amounts  to  such 
proportion  of  the  following  percentages  of  the  gross  receipts  of 
the  company  as  the  length  of  tracks  operated  by  it  in  public 
ways  and  places,  in  such  city  or  town,  bears  to  the  total  length 
of  track  operated  by  it  in  public  ways  and  places. 

The  percentages  are  based  on  the  annual  gross  receipts  per 
mile  of  track,  and  computed  upon  the  aggregate  of  such  annual 
gross  receipts,  as  follows:  — 


1918.]  SENATE  —  No.  265.  27 

Per  Cent. 

$4,000  or  less, 1 

More  than  $4,000  and  less  than  $7,000, 2 

More  than  $7,000  and  less  than  $14,000, 2\ 

More  than  $14,000  and  less  than  $21,000, 2\ 

ISIore  than  $21,000  and  less  than  $28,000, 2J 

$28,000  or  more, .  3 

The  Boston  Elevated  Railway,  including  the  West  End,  does 
not  pay  this  commutation  or  excise  tax,  but  was  formerly 
assessed  a  special  compensation  tax.  This  special  tax,  which 
was  based  on  gross  earnings  of  all  lines  owned,  leased  or  oper- 
ated, amounted  to  seven-eighths  of  1  per  cent,  of  the  gross 
earnings  when  the  annual  dividend  was  not  greater  than  6  per 
cent.  If  the  dividend  exceeded  6  per  cent,  then  the  sum  equal 
to  the  excess  of  the  dividend  over  6  per  cent,  was  to  be  paid  in 
addition  to  the  regular  compensation  tax  of  seven-eighths  of 
1  per  cent. 

The  commutation  or  excise  tax  amounted  to  nearly  $492,000 
in  1916.  On  a  mileage  basis  the  excise  tax  amounted  on  an 
average  to  $200  per  mile  of  single  track  (mileage  of  Boston 
Elevated  and  leased  lines  excluded).  The  following  summary 
shows  what  the  taxes  for  1916  amounted  to  as  percentage  of 
1916  gross  earnings:  — 

Per  Cent. 

Property  tax  (alllines), 2.14 

Corporate  franchise  tax  (all  lines), 1.76 

Excise  tax  (Boston  Elevated  lines  excluded),        :       .       .       .       .2.16 
Compensation  tax  (formerly  assessed)  (Boston  Elevated  lines  only),    }  of  1 

Further  information  relative  to  taxes  in  1916,  and,  in  some 
cases,  for  years  previous  to  1916,  will  be  found  in  Tables 
XVII.-XXL,  inclusive,  in  Appendix  C  of  this  report. 

(4)  Compensation  Tax  {Boston  Elevated),  —  This  tax  was  also 
distributed  to  the  municipalities  in  proportion  to  the  mileage  of 
elevated  and  surface  track,  reckoned  as  single  track  in  the  vari- 
ous cities  and  towns.  The  Boston  Elevated  Railway  was  re- 
cently relieved  of  this  tax  except  when  dividends  exceeded  6  per 
cent.,  in  which  case  the  tax  was  to  be  equal  to  such  excess  of 
dividends  over  the  6  per  cent.,  as  a  result  of  the  report  of  the 
special  commission  which  considered  the  financial  condition  of 
the  company  and  reported  in  February,  1917,  to  the  Legisla- 
ture.   This  special  tax  was  formerly  assessed  as  a  compensation 


"r 


ii 


28  REPORT  ON  STREET  RAILWAYS.  [Feb. 

for  the  use  and  occupation  of  the  public  streets,  squares  and 
places.  The  compensation  tax  paid  by  the  Boston  Elevated  for 
the  year  ending  Sept.  30,  1916,  amounted  to  $160,786. 

(5)  Requirements  relative  to  the  Maintenance  and  Repair  of 
Public  Ways  by  Street  Railway  Companies.  ~  The  next  phase  of 
the  subject  under  consideration  is  the  requirement  relative  to 
the  maintenance  and  repair  of  public  ways  by  the  street  rail- 
ways. In  fact,  for  a  proper  consideration  of  this  subject  it  is 
absolutely  essential  to  consider  taxation  in  its  relation  to  the 
requirements  made  on  street  railways  in  connection  with  repair 
of  highways.  The  excise  tax  was  primarily  established  in  1898, 
in  order  to  relieve  the  street  railways  of  certain  duties  relative 
to  the  highways. 

A  brief  historical  sketch  seems  desirable  at  this  point  in  order 
to  understand  the  factors  relating  to  the  establishment  of  this 
excise  tax,  and  in  order  to  see  clearly  to  what  extent  this  tax 
has  worked  out  in  a  manner  equitable  both  to  the  street  rail- 
ways and  to  the  municipalities. 

The    first    street    railway    charters    in    Massachusetts    were 
granted   in   1853  to  the   Metropolitan   Railroad   Company   of 
Boston  and  to  the  Cambridge  Railroad  Company.     In  both 
cases  the  street  railroad  company  was  required  to  maintain  the 
portion  of  streets  and  bridges  occupied  by  its  tracks.    Of  course, 
in  the  early  days  before  electrification  there  was  considerable' 
deterioration  of  the  highways  due  to  the  travel  of  the  horses. 
There  were  various  changes  made  from  that  time  up  to  1882. 
At  this  date  the  requirements  were  that  each  street  railway 
should  keep  in  repair  the  paving,  upper  planking  or  other  sur- 
face material  of  the  portion  of  streets,  roads  and  bridges  occu- 
pied by  its  tracks.     If  such  tracks  occupied  unpaved  streets 
the  company  was  required  to  keep  in  repair  an  additional  18 
inches  on  each  side  of  the  portion  occupied  by  its  tracks. 

Up  to  1882  the  street  railway  companies  had  generallv  been 
required  to  conform  to  regulations  made  by  local  authorities  as 
to  the  removal  of  snow  and  ice.  In  1882  the  requirement  pro- 
vided that  the  board  of  aldermen  or  selectmen  might  establish 
such  regulations  as  to  the  rate  of  speed,  mode  of  use  of  the 
tracks,  and  the  removal  of  snow  and  ice  therefrom  as  the  in- 
terest and  neefl  of  the  public  might  require. 


1918.) 


SENATE  —  No.  265. 


29 


The  legislation,  as  above  mentioned,  of  1882,  relative  to  the 
repair  and  maintenance  of  highways  and  the  removal  of  snow 
and  ice,  was  in  force  in  1898.  At  this  time  a  special  committee 
was  appointed  to  consider  the  relations  between  street  railways 
and  municipalities.  On  this  special  committee  were  Charles 
Francis  Adams  of  Lincoln,  William  W.  Crapo  of  New  Bedford, 
and  Elihu  B.  Hayes  of  Lynn.  The  committee  gave  much 
study  to  the  question  of  street  repair  and  snow  removal,  and 
came  to  the  conclusion  that  the  method  existing  at  that  time, 
—  i.e.,  by  which  the  street  railways  actually  did  the  work  of  re- 
pairing the  streets  and  removing  the  snow,  —  caused  continual 
misunderstanding  between  the  street  railways  and  municipal 
authorities,  and  took  from  the  local  authorities  the  undivided 
responsibility  which  they  should  have  over  their  own  highways. 

The  special  committee  of  1898  recommended  legislation  re- 
lieving the  companies  of  their  former  duties  of  repair  and  main- 
tenance of  highways,  and  in  lieu  of  this  substituted  a  tax  based 
upon  gross  receipts.  This  tax,  which  the  committee  referred 
to  as  a  commutation  tax,  was  to  be  of  a  percentage  on  gross 
receipts  varying  with  the  receipts  per  mile  of  track  operated, 
and  was  to  be  distributed  in  the  case  of  each  company  among 
the  cities  and  towns  in  proportion  to  their  mileage  of  tracks  in 
public  ways.  With  regard  to  snow  removal  the  committee 
recommended  that  the  company  should  level  the  snow  plowed 
by  them  from  their  tracks  in  such  a  manner  as  to  meet  the 
approval  of  the  superintendent  of  streets,  but  that  they  should 
not  be  required  to  remove  from  the  streets  the  snow  displaced 
from  their  tracks. 

Briefly,  this  commutation  tax,  according  to  the  ideas  of  the  I 
special  committee,  was  to  relieve  the  companies  of  all  their  I 
former  requirements  as  to  repair  of  highways  and  removal  of  1 
snow  from  their  streets.    It  was  the  intention  apparently  of  this   \ 
committee  that  such  legislation  should  apply  to  all  street  rail-    ' 
ways  in  the  Commonwealth,  including  the  lines  operated  by  the 
Boston  Elevated. 

Unfortunately,  however,  chapter  578  of  the  Acts  of  1898, 
based  on  the  recommendations  of  this  committee,  did  not  en- 
tirely carry  out  the  ideas  expressed  by  this  committee.  The 
commutation  or  excise  tax  was  provided  for  in  substantially 


I 


30  REPORT  ON  STREET  RAILWAYS.  [Feb. 

the  manner  recommended  by  the  special  committee,  and  the 
railways  were  relieved  in  general  from  repairing  any  portion  of 
the  streets  and  bridges.  However,  the  proviso  was  added  that 
the  company  should  "remain  mbject  to  all  the  legal  obligations 
imposed  in  original  grants  of  locatimsr  With  regard  to  snow 
removal  the  companies  were  required  to  clear  snow  from  their 
tracks  in  such  a  manner  as  would  be  approved  by  the  superin- 
tendent of  streets.  This  legislation  provided  that  the  lines  of 
the  Boston  Elevated  should  be  excluded  from  this  act  for  a 
period  of  twenty-five  years  from  June  10,  1897. 

Thus  it  will  be  seen  that  this  legislation  did  not  provide  a 
commutation  tax  which  should  relieve  the  street  railways  of  all 
work  in  connection  with  repair  of  pavements.     Neither  did  it 
specifically  provide  that  the  street  railway  company  should  in 
no  case  be  required  to  actually  remove  any  snow  from  the 
streets.    Since  that  time  it  has  been  decided  by  the  courts  that 
the  "original  grant  of  location"  means  the  first' location  granted 
to  a  street  railway  company  by  a  city  or  town,  and  that  an 
obligation  to  maintain  or  repair  the  public  ways  imposed  b^ 
such  an  "original  grant"  is  valid  notwithstanding  the  legisla- 
tion  of  1898. 

Since  1898  there  have  been  slight  changes  in  legislation  rela- 
tive to  these  matters.    At  the  present  time  the  company  is  re- 
quired, with  reference  to  snow  removal,  to  clear  snow  from  its 
tracks  in  such  manner  as  will  meet  the  approval  of  the  super- 
intendent  of  streets,  provided  that  no  street  railway  shall  be 
compelled  to  remove  from  the  streets  in  which  its  tracks  are 
located  an  amount  of  snow  greater  than  it  has  cleared  from 
between  its  rails  and  between  its  tracks,  and  from  a  space  18 
inches  wide  on  either  side  of  its  tracks.    The  special  committee 
recommended  that  the  amounts  received  by  the  cities  and  towns 
from  this  excise  tax  should  be  treated  as  a  separate  fund  and 
applied   to  the  construction,   repair  and   maintenance  of  the 
public  ways  within  such  cities  and  towns.     The  legislation  of 
1898  omitted  this  recommendation  as  to  the  separate  fund,  but 
provided  that  the  amounts  received  from  the  excise  tax  should 
be  applied  to  the  construction,  repair  and  maintenance  of  the 
public  ways  and  the  removal  of  snow  therefrom.     Since  that 
time   certain   changes   have   been   made,   one   being  that   the 


1918.] 


SENATE  —  No.  265. 


31 


amounts  received  from  the  excise  tax,  together  with  that  re- 
ceived from  the  corporate  franchise  tax,  should  be  applied  to 
the  repair  and  maintenance  of  those  portions  of  the  public  ways 
in  which  the  tracks  of  the  companies  were  located,  and  the 
removal  of  snow  from  such  public  ways.  However,  this  proviso 
has  since  been  changed,  and  at  present  merely  requires  that  the 
amounts  received  from  the  excise  and  corporate  franchise  taxes 
shall  be  used  "toward  the  repair  and  maintenance  of  the  public 
ways  and  the  removal  of  snow  therefrom  within  such  city  or 
town."  As  mentioned  with  regard  to  taxation,  the  Boston 
Elevated  pays  no  excise  tax,  and  is  still  required  to  keep  in 
repair  portions  of  the  streets  occupied  by  its  tracks,  i.e.,  be- 
tween the  tracks  in  paved  streets,  and  in  unpaved  streets  for  a 
width  of  18  inches  outside  its  tracks. 

The  special  committee  of  1898  admitted  that  perhaps  the 
excise  tax,  in  the  form  in  which  they  recommended  it,  might 
not  prove  absolutely  just  to  all  parties  concerned,  but  they 
were  of  the  opinion  that  it  would  give  a  reasonably  fair  basis  of 
settlement.  It  may  be  interesting  to  see  just  how  this  excise 
tax  has  worked  out  during  the  period  of  nearly  twenty  years 
since  that  time. 

Two  main  points  should  be  considered  in  connection  with  the 
study  of  the  conditions  relative  to  these  matters.  First,  has 
this  excise  tax  relieved  the  companies  of  the  work  in  connection 
with  the  repair  of  highways  in  the  spirit  and  to  the  extent  of 
the  recommendations  of  the  special  committee  of  1898?  Second, 
has  the  excise  tax  of  itself  provided  an  equitable  basis  for  the 
commutation  of  the  street  railway  duties  with  regard  to  repair 
of  highways? 

Considering  the  first  of  these  items,  namely,  whether  the 
companies  have  been  relieved  of  the  street  repairing,  it  has  been 
proved  that  in  many  cases  the  companies  have  been  required  to 
spend  large  sums  of  money  in  the  repair  and  maintenance  of 
paving  in  accordance  with  the  "original  grants  of  location."  It 
will  be  remembered  that  the  legislation  of  1898  did  not  relieve 
the  companies  of  this  burden.  In  many  cases  cities  and  towns 
have  relieved  the  companies  of  such  expenses,  being  willing  to 
accept  the  excise  tax  as  a  commutation  of  such  duties.  In  other 
cases,  however,  cities  and  towns  have  required  the  street  rail- 


!:i: 


I  :i 


32 


RETORT  ON  STREET  RAILWAYS.  [Feb.      I     1918.] 


SENATE -No.  265. 


33 


ways  to  live  up  rigidly  to  all  of  the  original  requirements,  and 
iiave,  m  addition,  received  their  share  of  the  excise  tax      In 
other  eases  the  street  railways  have  been  required  not  onlv  to 
repair  and  maintain  the  highways,  but,  in  addition,  to  lay'im- 
proved   pavements   between   their   tracks   whenever   the 'local 
authorities  decided  to  improve  the  pavements  of  such  streets. 
The  street  railways  have  sometimes  capitalized  the  difference 
between  the  cost  of  such  improved  pavement  and  what  the  cost 
would  have  been  to  merely  repair  or  replace  the  old  tvpe  of 
pavement,  but  this  has  not  prevented  the  practice  from'  heini? 
burdensome  to  the  company.     While  the  street  railwavs  have 
perhaps  a  moral  right  to  refuse  to  make  improvements  in  the 
pavements,  etc.,  it  should  be  remembered  that  a  public  service 
corporation  is  in  a  poor  position  to  refuse  to  do  what  the  local 
authorities  desire.    Unfortunately,  it  is  true  that  there  has  been 
bargaining  with  street  railways  by  local  authorities.    Whenever 
a  street  railway  requests  some  privilege,  such  as  a  location  for  a 
new  sidmg,  even  though  the  street  railway  may  be  well  within 
Its  rights,  the  municipalities  often  decline  to  make  the  grant 
without  obtaining  some  sort  of  concessions.    In  such  cases  the 
conipany  should  not  be  held  up  for  a  new  paving  from  curb  to 
curb,  or  some  similar  burden.    In  1916  the  Bay  State  paid  over 
$100,000  for  the  maintenance  of  paving  in  addition  to  its  excise 
tax  of  $215,000.    In  the  year  1916  the  street  railway  companies 
paid  an  excise  tax  of  nearly  $500,000.    This  figure  excludes  the 
Imes  of  the  Boston  Elevated,  which  company  does  not  pay  an 
excise  tax.    The  street  railways  are  paying  a  further  amount  for 
maintenance  of  paving,  which  we  are  unable  to  estimate    as 
these  costs  are  not  separated  from  the  expenses  incurred  in 
connection  with  the  renewals  of  rails  and  ties.     The  corporate 
franchise  tax  is  also  distributed  to  the  cities  and  towns,  with 
the  requirement  that  it  shall  be  used  for  the  repair  of  highways 
and  removal  of  snow  therefrom.    The  State  keeps  a  relativelv 
small  amount  of  this  franchise  tax,  perhaps  $10,000  a  year,  due 
to  tracks  located  on  public  reservations. 

The  second  matter  is  whether  the  excise  tax  as  assessed  at 
present  is  equitable  both  to  the  various  street  railways  and  to 
all  the  various  cities  and  towns.  Weight  of  equipment  and 
speed  of  cars  have  changed,  and  new  t^-pes  of  paving  have 


come  into  use.    The  excise  tax  is  given  in  detail  earlier  in  this 
report  as  a  percentage  of  gross  receipts,  this  percentage  varying 
with  the  average  receipts  per  mile  of  track  and  increasing  from 
1  per  cent,  where  average  receipts  are  $4,000  or  less  to  3  per 
cent,  where  the  average  receipts  per  mile  are  $28,000  or  more. 
For  example,  a  small  town  having  within  its  limits  the  tracks 
of  a  large  company  operating  in  a  near-by  city  may  receive  for 
its  share  of  the  excise  tax  a  revenue  based  on  a  relatively  high 
percentage  of  the  gross  earnings,  while  another  small  town  with 
similar  mileage  and  track  conditions  may  be  located  on  a  street 
railway  having  a  much  smaller  gross  income  per  mile  of  track. 
The  second  town  would  therefore  receive  a  sum  considerably 
smaller  than  the  first  town  for  its  share  of  the  excise  tax. 
There  is  a  town  having  10  miles  of  track  which  receives  between 
$3,500  and  $4,000  as  its  share  of  the  excise  tax,  while  a  second 
town  having  the  same  mileage  receives  only  a  little  over  $2,000 
as  an  excise  tax  from  another  company,  and  whereas  a  third 
town  with  the  same  mileage  receives  less  than  $300  as  its  share 
of  the  excise  tax.    The  first  of  these  towns  receives  about  thir- 
teen times  as  much  per  mile  of  track  as  does  the  third,  namely, 
$m  per  mile  of  track  against  $30  per  mile.    While  it  cannot  be 
said  that  traffic  conditions  are  necessarily  the  same,  the  cost  of 
highway  maintenance  does  not  vary  by   1,300  per  cent.,   as 
shown  in  these  figiires. 

No  allowance  is  now  made  for  the  fact  that  it  costs  much 
more  to  maintain  a  city  pavement  than  a  country  road.  In 
many  cases  the  street  railway  runs  at  the  side  of  the  highway, 
where  little  maintenance  expense  is  necessary. 

The  excise  tax  paid  to  certain  towns  in  1916,  compared  with 
the  money  paid  for  the  entire  maintenance  of  highways  in  the 
sanae  towns  for  the  year  ending  Dec.  31,  1914,  the  last  year  for 
which  we  have  figures,  shows  that  one  town  paid  in  1914,  $2,751 
for  maintenance  of  highways,  and  in  1916  received  $1,358  from 
the  excise  tax.  In  this  town  only  13  per  cent,  of  the  highways 
contained  street  railway  tracks.  Since  the  portion  of  the  high- 
way  actuaUy  occupied  by  the  tracks  in  a  town  would  generally 
not  be  over  40  per  cent.,  it  is  safe  to  say  that  in  this  town  only 
5  per  cent,  of  the  area  of  its  highways  contained  tracks,  while 
for  this  5  per  cent,  of  highways  the  amount  received  was  equal 


^^mH 


34 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


35 


to  nearly  one-half  of  the  total  expenditures  for  highways.  An- 
other town  received  $2,130  from  the  excise  tax  and  spent  $2,561 
for  the  entire  cost  of  maintenance  of  highways.  In  this  town 
the  percentage  of  the  length  of  highways  in  which  street  railway 
tracks  are  located  is  15  per  cent.  In  the  case  of  one  unprofit- 
able line  the  taxes  amounted  to  more  than  the  gross  earnings. 
In  its  report  in  1916  to  the  Legislature  on  the  statutes  relative 
to  the  repair  and  maintenance  of  highways  in  which  street  rail- 
ways are  located,  the  Public  Service  Commission  included  a 
table  showing  valuable  information  on  this  subject.  Additional 
information  can  be  obtained  from  many  sources  proving  that 
the  excise  tax  neither  relieves  the  street  railways  from  many 
burdens  relative  to  repair  and  maintenance  of  highways,  nor  is 
equitable  as  far  as  the  individual  cities  and  towns  are  concerned, 
although  if  the  companies  had  been  relieved  of  the  burdens  as 
intended  the  aggregate  may  have  been  entirely  fair. 

Aside  from  the  matter  of  the  excise  tax  and  its  distribution, 
the  general  question  arises  as  to  the  equity  of  the  various  re- 
quirements made  on  the  streert  railways  relative  to  the  high- 
ways, whether  these  requirements  be  in  the  form  of  work  to  be 
done  on  the  highways  by  the  companies  themselves,  or  whether 
a  tax-  is  assessed  as  a  commutation  of  such  duties. 

The  presence  of  street  railway  tracks  in  a  street  causes  some 
expense  to  a  municipality.  The  expense  may  be  due  to  the 
actual  deterioration  of  the  pavement  near  the  rails,  as  well  as 
to  the  wear  due  to  the  increased  vehicular  traflSc  on  the  portion 
of  the  pavement  outside  the  tracks.  The  question  then  arises 
as  to  what  is  a  fair  estimate  of  the  paving  expense,  chargeable 
to  the  street  railway,  due  to  the  actual  presence  of  the  track. 
The  expense  of  laying  an  improved  type  of  pavement  is  not  an 
equitable  charge  to  the  company.  The  cost  of  complete  re- 
newal of  pavement  even  of  the  same  type  should  not  always  be 
shared  by  the  street  railway. 

If  the  street  railway  is  required  to  pay  a  sum  greater  than  is 
actually  required  to  repair  the  pavements  that  have  actually 
been  deteriorated  by  its  presence,  the  real  result  is  that  the  car 
riders  are  paying  a  tax  which  should  be  borne  by  the  com- 
munity. 

Is  it  fair  to  ask  the  person  who  rides  in  the  street  car  to  pay 


some  of  the  taxes  which  should  be  paid  by  the  automobile 
rider?  Local  authorities  can  reduce  the  tax  rate  in  their  munic- 
ipality by  this  expedient,  and  there  is  little  doubt  but  what  it 
has  been  done  to  some  extent  in  the  past.  Unfortunately,  few 
people  have  appreciated  this  fact,  and  so  have  permitted  an 
unfair  system  to  develop,  which  can  only  be  remedied  by  a 
complete  understanding  of  the  situation  now  confronting  the 
street  railways,  and  an  urgent  desire  to  eradicate  the  past 
defects. 

4.     Improvements  in  Service. 

With  the  development  of  street  railways,  the  car  rider  has  re- 
ceived quicker  and  more  comfortable  transportation.  The  first 
horse  cars  were  unheated  and  had  straw  on  the  floors.  To-day 
in  Boston,  and  probably  throughout  the  entire  State,  cars  are 
heated  by  electricity  at  high  cost.  Other  cities  still  use  stoves 
in  the  cars  at  a  less  cost.  Would  the  Massachusetts  public  be 
willing  to  substitute  stoves  for  the  present  electrically  produced 
heat  which  warms  the  car  in  a  uniform  and  satisfactory  man- 
ner? Within  a  few  months  a  New  York  rapid  transit  line 
asked  the  Public  Service  Commission  for  permission  to  reduce 
heat  in  the  cars  to  a  certain  point,  in  order  to  save  fuel,  making 
use  of  the  so-called  "animal  heat"  of  the  passengers.  Permis- 
sion was  granted  and  the  experiment  resulted  in  a  vigorous 
protest.  The  issue  was  reflected  in  a  mayoralty  campaign,  and 
the  Public  Service  Commissioners  were  threatened  with  removal 
from  oflBce  for  granting  such  permission.  This  illustrates  to 
what  an  extent  the  improvements  and  comforts  of  service  of 
yesterday  become  the  necessities  of  to-day.  In  many  other 
ways  the  comfort  of  the  car  rider  has  increased  during  recent 
years. 

The  development  of  the  rapid  transit  system  in  Boston  has 
been  marked.  Over  $50,000,000  has  been  expended  in  the  ele- 
vated and  subway  lines  operated  by  the  Boston  Elevated  Rail- 
way. The  annual  rental  paid  for  these  subways  will  be  in  the 
vicinity  of  $2,000,000  when  the  Dorchester  tunnel  is  completed. 
Thus  the  entire  receipts  from  the  transportation  of  40,000,000 
passengers  every  year  on  the  Boston  Elevated  system  are  paid 
for  rental  of  subways  alone.  In  no  other  large  city  in  this  country, 
probably  in  the  world,  is  there  so  complete  a  system  of  free 


36 


REPORT  OxN  STREET  RAILWAYS. 


[Feb. 


I'  ' 


transfer  between  surface  and  rapid  transit  lines  as  in  Boston. 
What  this  means  can  be  understood  by  visits  to  other  large 
cities,  where  the  surface  lines  are  run  to  a  great  extent  inde- 
pendently  of  the  rapid  transit  lines.  There  are  no  systems  in 
the  country  which  have  transfer  stations  at  non-enclosed  areas 
on  such  a  large  scale  as  the  Boston  Elevated  has.  Central 
Square,  Cambridge,  furnishes  a  prominent  example.  At  points 
such  as  this  the  public  transacts  much  business  without  the 
necessity  of  an  additional  fare,  such  as  would  be  exacted  in 
many  cities. 

It  should  be  noted  that  nearly  one-half  of  the  car  riders  in  the 
State  are  carried  on  the  lines  of  the  Boston  Elevated.  Photo- 
graphs are  shown  in  this  report  illustrating  the  development  of 
the  street  car,  from  the  horse  car  of  the  early  days  to  the  latest 
type  of  center-entrance  prepa>Tnent  cars  recently  put  in  opera- 
tion in  Boston. 

Similar  improvements  in  service,   both  as  to  comfort  and 
speed,  have  been  made  in  nearly  all  parts  of  the  State.    The 
cost  of  these  improvements  has  been  represented  in  general  by 
capital  investments,  since  at  no  time  have  the  earnings  been 
sufficient  to  meet  these  additional  burdens.     Many  operating 
economies  have  been  attained  through  the  use  of  rapid  transit 
Imes,  improved  equipment,  etc.    In  connection  with  the  con- 
struction of  the  subways  and  the  increase  in  real  estate  values, 
it  is  unfortunate  that  a  private  company  such  as  the  Boston 
Elevated  should  have  been  used  to  boom  real  estate.    The  con- 
struction of  the  subways  —  particularly,  perhaps,  the  Boylston 
Street  and  the  Cambridge  subways  — has  increased  the  values  of 
real  estate  to  a  great  extent.    In  other  cities,  Cleveland,  for  in- 
stance, the  opposite  methods  have  been  employed.    When  real 
estate  promoters  desired  to  enhance  the  value  of  their  land  by 
providing  transportation  facilities  they  furnished  money  to  the 
street  railways  to  build  the  desired  extensions,  and  in  some 
cases  paid  deficits  on  these  lines  until  they  became  paying  parts 
of  the  property.     This  seems  a  much  sounder  principle  than 
the  real  estate  situation  resulting  in  and  near  Boston  from  the 
construction  of  the  subways. 


1918.] 


SENATE  -  No.  265. 


37 


5.     Non-paying  Lines. 

The  history  of  street  railway  development  throughout  the 
country  has  shown  very  clearly  that  many  lines  have  been  built 
which  should  never  have  been  constructed.  In  the  early  days 
of  electric  railways  prospects  looked  good  both  to  the  promoter 
and  investor.  It  appeared  that  electric  railways  could  make 
money  almost  anywhere.  Consequently  lines  were  surveyed, 
constructed  and  placed  in  operation  fifteen  years  ago  which 
to-day  cannot  earn  their  operating  expenses  and  fixed  charges. 
In  many  cases  these  lines  probably  have  never  paid  any  divi- 
dends. These  non-paying  lines  may  be  divided  into  two  general 
classes,  —  first,  those  that  are  independent,  and  second,  those 
that  have  been  merged  into  the  larger  companies.  In  the  first 
case  the  lines  have  struggled  along  with  fares  increased,  per- 
haps, as  high  as  they  could  go  without  resulting  in  a  decreased 
gross  revenue.  Ultimately,  however,  these  lines  have  been 
forced  into  the  hands  of  receivers,  or  else  sold  directly  to  the 
junk  dealer. 

In  the  second  case  the  lines  have  been  granted  a  new  lease  of 
life  at  the  expense  of  the  parent  company.  Often,  however, 
these  non-paying  lines  were  purchased  at  a  good  figure,  in 
order  to  successfully  carry  out  the  desired  consolidation.  As  an 
example  of  these  non-paying  lines,  the  Bay  State  calls  attention 
to  the  fact  that  it  costs  nearly  50  cents  per  passenger  on  the 
Billerica  branch.  On  another  line  it  was  stated  that  the  taxes 
alone  amounted  to  more  than  the  gross  receipts. 

A  greatly  increased  fare  does  not  provide  a  solution  for  such 
lines,  since  there  is  a  limit  beyond  which  fares  cannot  go  with- 
out an  actual  decrease  in  gross  revenue.  The  alternatives  re- 
maining are  (1)  to  tear  up  the  rails  for  junk,  (2)  to  carry  the 
burden  of  the  non-paying  line  by  some  other  portion  of  the 
system,  (3)  to  reduce  expenses  by  the  operation  of  one-man 
cars  or  automobiles  equipped  to  run  on  the  rails,  or  (4)  in  case 
the  continuance  of  the  line  is  sufficiently  important  to  the 
community  the  company  could  receive  some  form  of  subsidy 
or  community  assistance.  The  Commission  has  studied  the  so- 
called  trackless  trolley  in  this  connection,  but  does  not  believe 
that  it  can  express  an  opinion  on  matters  that  are  purely  oper- 
ating in  their  essence. 


38 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1018.] 


SENATE  —  No.  265. 


39 


6.    Failure  to  provide  for  Depreciation  and  Obsolescence. 

The  first  question  that  arises  when  street  railways  fail  to  pay 
dividends  is  whether  they  are  overcapitalized,  due  to  the  issue 
of  stock  without  a  corresponding  actual  investment  in  the 
property.  This  Commission  has,  like  other  commissions  study- 
ing this  subject,  reached  the  conclusion  that  the  capitalization 
of  the  Massachusetts  street  railways  does  not  include  any  con- 
siderable amount  of  watered  stock.  In  certain  individual  cases 
the  capitalization  did  contain  a  certain  amount  of  watered 
stock.  This  amount,  however,  is  probably  negligible  as  com- 
pared with  the  entire  capitalization.  The  Board  of  Railroad 
Commissioners  have  had  in  the  past,  and  the  Public  Service 
Commission  at  present  have,  considerable  authority  over  the 
issue  of  stock.  Only  before  1893  or  1894  did  the  Railroad  Com- 
missioners lack  suJflScient  powers  to  properly  supervise  the  issu- 
ance of  stocks.  At  that  time  the  total  investment  in  the  street 
railways  amounted  to  only  $50,000,000,  of  which  about  half 
was  capital  stock,  compared  with  nearly  $227,000,000  invested 
in  1916. 

In  1912  the  net  capitalization  per  mile  of  track  in  Massachu- 
setts was  $57,800  as  compared  with  $185,600  for  New  York, 
$131,800  for  Pennsylvania,  $72,200  for  Ohio  and  $78,400  for 
Indiana.  The  average  for  New  England  at  that  date  was 
$61,600,  and  for  the  entire  United  States,  $104,900.  In  1916 
the  capitalization  per  mile  of  main  track  in  Massachusetts  was 
$69,935.  Excluding  the  Boston  Elevated,  which  had  a  capital- 
ization of  $1,337,648,  due  to  its  rapid  transit  lines,  the  average 
for  the  remaining  street  railways  in  the  State  was  $52,111. 

The  question  then  presents  itself  whether  the  existing  capi- 
talization bears  a  fair  relation  to  the  value  of  the  property. 
The  question  also  arises  to  what  extent,  if  any,  should  dividends 
be  paid  on  stock  issued  (H*iginally  for  equipment  which  has 
since  been  discarded.  A  more  complete  investigation  relative 
to  the  subject  of  depreciation  and  obsolescence  is  necessary  in 
order  to  obtain  a  clear  understanding  of  this  phase  of  the  ques- 
tion. The  following  material,  dealing  with  depreciation  and  its 
relation  to  capitalization,  has  therefore  been  included  in  this 
report. 


It  is  unfortunate  that  Massachusetts  street  railways  have 
not  set  aside  from  earnings  a  sum  sufficient  to  provide  for  de- 
preciation and  obsolescence,  —  not  merely  providing  for  re- 
newals of  machines  and  the  piu-chase  of  new  and  improved 
types  of  cars  to  replace  worn-out  or  obsolete  cars,  and  more 
efficient  units  in  the  power  plants,  but  also  laying  aside  each 
year  a  fund  adequate  to  meet  the  estimated  depreciation.  As 
the  art  of  railroading  has  advanced,  old  types  of  equipment  have 
been  replaced  by  more  improved  types,  even  though  in  many 
cases  the  change  was  made  not  because  the  old  equipment  was 
worn  out,  but  merely  because  it  was  more  economical  to  operate 
with  equipment  designed  according  to  later  practice,  or  because 
the  greater  convenience  and  comfort  of  the  public  rendered 
such  new  equipment  desirable. 

The  street  railways  of  Massachusetts  have  acted  in  this  re- 
spect in  the  same  manner  as  street  railways  in  other  portions  of 
the  country.  This  Commission  has  found  that  no  street  rail- 
ways have  set  aside  a  sum  sufficient  to  take  care  of  these  items 
of  depreciation  and  obsolescence.  The  various  regulatory  com- 
missions, including  the  Interstate  Commerce  Commission,  have 
made  their  recommendations  rather  vague  on  this  subject,  and 
have  apparently  dodged  the  issue  of  absolutely  requiring  any 
sufficient  sum  set  aside  for  this  purpose.  In  case  a  new  type  of 
car  was  purchased  it  has  been  customary  to  capitalize  the  differ- 
ence between  the  cost  of  this  car  and  the  first  cost  of  the  old 
car  which  it  replaced.  In  many  cases,  however,  the  entire  cost 
of  the  new  cars  has  been  capitalized.  Thus,  the  property  repre- 
sented by  some  of  the  invested  capital  has  been  withdrawn  from 
service  without  a  corresponding  reduction  in  the  outstanding 
securities.  To  this  extent,  then,  have  dividends  been  paid  on 
unused  and  obsolete  property.  Identical  results  have  been 
found  relative  to  the  steam  railroads. 

This  failure  to  provide  for  proper  depreciation  and  obsoles- 
cence has  been  fully  realized  only  during  the  past  few  years. 
Under  the  conditions  of  to-day,  where  the  costs  of  labor  and 
material  are  so  high,  the  failure  to  provide  for  depreciation  is' 
the  more  marked. 

No  one  set  of  persons  is  responsible  foor  this  condition.  The 
Massachusetts  street  railways  have  surely  been  at  fault,  but  no 


40 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  -  No.  265. 


41 


more  so  than  the  street  railways  throughout  the  country. 
Moreover,  the  Public  Service,  or  similar  commissions  in  the 
various  States,  has  never  required  the  street  railways  to  set 
aside  sufficient  sums  for  this  purpose.  Changes  have  been  so 
rapid  in  the  art  of  street  railroading  that  it  would  have  been 
impossible  to  determine  just  how  much  money  should  have  been 
set  aside  for  these  purposes.  But  the  fact  remains  that  a  sum 
should  have  been  set  aside  to  cover  depreciation  and  obsoles- 
cence. 

This  is  no  time  to  elaborate  on  the  mistakes  of  the  past,  ex- 
cepting in  so  far  as  it  may  be  necessary  in  order  to  show  what 
effect  these  errors  of  judgment  have  had  in  bringing  about  the 
conditions  now  confronting  the  street  railways.  In  some  of  the 
recent  franchises  granted  to  street  railways  there  has  been  a 
definite  attempt  made  to  provide  for  a  substantial  depreciation 
fund  to  be  set  aside  out  of  earnings.  In  Dallas,  Tex.,  a  new 
franchise  has  been  put  into  operation  within  the  last  few 
months.  The  Dallas  plan,  mentioned  elsewhere  in  the  report, 
represents  one  of  the  latest  types  of  the  so-called  service-at-cost 
plans. 

The  Dallas  franchise  provides  for  a  repair,  maintenance  and 
depreciation  reserve.  The  following  quotation  from  the  fran- 
chise  outlines  the  purpose  of  this  reserve:  — 

The  grantee  covenants  that  it  will  at  all  times  keep  all  its  property, 
including  the  property  embraced  in  said  lease  from  Northern  Texas  Trac^ 
tion  Company,  in  good  and  businesslike  order  and  repair,  and,  as  a  whole, 
in  condition  to  give  effective  service.  To  this  end,  and  to  the  end  also 
that  replacements  and  renewals  may  be  made  from  time  to  time  as  neces- 
sary to  maintain  the  property  in  such  condition,  and  to  offset  deprecia- 
tion  in  the  physical  condition  of  the  property  as  a  whole,  and  that  new 
types  of  equipment  may  be  introduced  to  supersede  those  that  become 
antiquated  or  obsolete  according  to  commonly  accepted  commercial 
standards  in  the  business,  the  grantee  will  set  up,  in  the  manner  herein- 
after provided,  a  repair,  maintenance  and  depreciation  reserve,  and  will 
use  the  same  when  and  to  the  extent  necessary  for  such  purposes  and  for 
those  purposes  only,  save  as  hereinotherwise  provided. 

It  is  provided  that  at  the  beginning  of  each  calendar  month 
the  company  shall,  after  paying  the  operating  expenses,  apply 
toward  the  creation  and  maintenance  of  the  repair,  maintenance 


and  depreciation  reserve  an  amount  equal  to  10  per  cent,  of  the 
gross  receipts  for  such  month.  It  is  next  provided  that  after 
certain  payments  to  the  accident  reserve,  a  dividend  amounting 
to  5  per  cent,  per  annum,  that  is,  five-twelfths  of  1  per  cent,  for 
such  month,  shall  be  paid  on  the  property  value.  It  is  further 
provided  that  for  every  additional  one-twelfth  of  1  per  cent,  set 
aside  for  the  payment  of  dividends  on  property  value  there  shall 
be  added  to  the  repair,  maintenance  and  depreciation  reserve  an 
amount  equal  to  3  per  cent,  of  the  gross  receipts  for  such  month. 
After  all  the  foregoing  payments  have  been  made,  the  balance 
of  the  gross  receipts  for  the  month  shall  be  added  to  the  repair, 
maintenance  and  depreciation  reserve  until  total  additions  from 
all  sources  for  the  then  current  calendar  year  shall  amount  to 
18  per  cent,  of  the  gross  receipts  during  such  year.  The  repair, 
maintenance  and  depreciation  reserve  shall  be  considered  nor- 
mal whenever  the  amount  equals  6  per  cent,  of  the  contempora- 
neous property  value,  until  such  time  as  the  fares  are  reduced 
to  Item  B  on  the  fare  schedule.  After  such  time  this  reserve 
shall  be  considered  normal  when  the  amount  equals  or  exceeds 
10  per  cent,  of  the  contemporaneous  property  value.  Whenever 
this  reserve  is  maintained  at  normal  the  company  may  pay  the 
full  amount  of  the  then  allowed  rate  of  return  on  the  property 
value. 

Summarizing,  the  Dallas  plan  provides  for  the  payment  of 
5  per  cent,  dividends  after  a  certain  sum  (10  per  cent,  of  the 
gross  receipts  for  the  month),  has  been  set  aside  for  the  repair, 
maintenance  and  depreciation  reserve.  Further  payments  in 
dividends  are  then  authorized  only  as  the  repair,  maintenance 
and  depreciation  reserve  is  also  increased,  the  normal  amount 
of  such  reserve  being  increased  if  it  is  below  normal.  The 
normal  amount  of  such  reserve  is  6  per  cent,  of  the  property 
value  on  the  top  schedule  of  fares,  and  10  per  cent,  of  the 
property  value  if  the  next  lower  schedule  of  fares  is  in  opera- 
tion. 

The  Cleveland  service-at-cost  plan  provides  for  a  mainte- 
nance and  renewal  fund.  The  following  quotation  from  the 
franchise  shows  the  purpose  for  which  this  fund  is  provided:  — 

The  intent  hereof  with  regard  to  the  sum  authorized  by  section  20 
hereof  to  be  set  aside  for  maintenance,  depreciation  and  renewal  is  to 


i  tl 


42 


REPORT  ON  STREET  RAILWAYS. 


(Feb. 


1918.] 


SENATE  —  No.  265. 


43 


enable  the  company  to  maintain,  renew,  replace,  preserve  and  keep  its 
railway  system  and  property,  and  every  part  thereof,  and  all  extensions, 
betterments  and  permanent  improvements  hereafter  made  pursuant 
hereto,  in  good  condition,  thorough  repair  and  working  order,  the  standard 
of  such  condition,  repair  and  working  order  being  an  average  for  the  entire 
system  of  70  per  cent,  of  its  reproduction  value. 

This  fund  is  maintained  by  setting  aside  a  certain  sum  per 
car-mile  operated.  The  car  miles  are  defined  as  revenue  miles, 
exclusive  of  car-house  and  car-yard  miles,  made  by  cars 
equipped  with  motors,  and  60  per  cent,  of  the  said  rate  of  simi- 
lar miles  made  by  trailers.  It  is  provided  that  in  January, 
February-,  March,  April,  May  and  December  4  cents  per  car- 
mile  shall  be  thus  set  aside;  in  November,  5  cents  per  car-mile; 
and  in  June,  July,  August,  September  and  October,  6  cents  per 
car-mile.  It  is  further  provided  that  the  amounts  set  aside  per 
ear-mile  for  maintenance  and  renewal  may  be  increased  or  de- 
creased by  agreement  between  the  city  and  the  company,  or, 
in  the  event  of  disagreement,  such  increase  or  decrease  in  the 
car-mile  allowance  shall  be  submitted  to  arbitration.  The  sum 
so  set  aside  shall,  if  not  needed  for  immediate  maintenance  or 
renewals,  be  accumulated,  and  may  from  time  to  time  be  in- 
vested in  the  bonds  of  the  company  or  in  the  payment  of  its 
floating  indebtedness  to  the  extent  that  the  same  form  part  of 
the  capital  value  of  the  con^>any. 

In  the  ordinance  adopted  in  Kansas  City,  Mo.,  it  is  provided 
that  at  the  beginning  of  each  fiscal  year  the  board  of  control 
shall  determine  what  percentage  of  the  gross  earnings  for  that 
year  shall  be  used  during  that  year  for  maintenance,  renewals 
and  depreciation.  The  amounts  so  determined  for  any  year 
for  maintenance,  etc.,  shall  not  be  less  than  16  per  cent,  of  the 
gross  earnings  in  the  previous  year.  If  the  full  percentages  of 
the  gross  earnings  assigned  for  this  purpose  shall  not  be  actu- 
ally expended,  the  balance  shall  be  set  aside  for  the  same  pur- 
poses during  the  next  or  any  succeeding  year.  It  is  provided 
that  the  percentages  fixed  as  above  shall  in  no  wise  limit  the 
obligations  of  the  company  to  keep  the  property  in  first-class 
condition. 

The  allowance  provided  in  the  above  franchises  show  clearly 
what  a  considerable  sum  of  money  is  now  considered  necessary 


to  make  proper  allowance  for  depreciation  and  obsolescence. 
Any  attempt  at  a  solution  of  the  street  railway  problems  in 
Massachusetts  which  does  not  provide  for  the  setting  aside  of 
some  such  substantial  sum  cannot  provide  a  satisfactory  solu- 
tion. Any  such  remedies  would  be  merely  temporary,  and 
within  a  few  years  the  same  problems  would  appear  in  an  even 
more  intensified  fashion. 

In  the  consideration  of  depreciation  and  obsolescence  the 
matter  of  rehabilitation  of  lines  has  not  been  mentioned  specifi- 
cally. These  matters  are  closely  allied.  All  of  the  recent  plans, 
such  as  those  of  Cleveland,  Dallas  and  others,  make  provision 
for  the  expenditure  of  a  considerable  amount  of  money  dis- 
tributed over  a  short  period  of  years  for  a  rehabilitation  and 
extension  of  lines.  It  is  generally  provided,  also,  that  the 
cities  shall  have  considerable  voice  as  to  the  conditions  under 
w^hich  such  expenditures  shall  be  made. 

Summarizing,  it  is  admitted  by  all  that  the  street  railways  in 
Massachusetts,  as  well  as  elsewhere,  have  not  made  proper 
provision  for  depreciation  in  the  past.  The  street  railways  are 
in  part  to  blame  for  lack  of  foresight  and  judgment.  This  error 
has  been  made  by  the  street  railways  in  all  parts  of  the  country. 

The  regulatory  commissions  should  have  required  funds  set 
aside  for  depreciation,  but  this  same  failure  has  been  made  by 
other  regulatory  commissions  elsewhere. 

7.    Lack  of  Cooperation  between  the  Street  Eailways  and  the 

Public, 

As  mentioned  earlier  in  this  report  there  has  been  little  ap- 
preciation of  the  fact  that  the  public  and  the  street  railways 
are  really  partners  in  the  transportation  business.  A  spirit  of 
fair  play  should  then  be  exhibited  by  both  parties  at  all  times. 

This  Commission  has  visited  the  more  important  cities  in  the 
United  States,  studying  transportation  conditions  and  discuss- 
ing the  various  street  railway  problems  with  the  street  railway 
and  the  public  officials.  The  Commission  has  found  that  wher- 
ever there  is  co-operation  between  the  public  and  the  street 
railways,  such  co-operation  is  reflected  in  the  resulting  street 

car  service. 
Cleveland  has  been  pointed  out  as  tbe  city  where  a  3-cent 


'  t 


/ 


REPORT  ON  STREET  RAILWAYS.  [Feb.     I    l^l^-l 


fare  prevails.    Although  Cleveland  does  not  in  reality  have  a 
3-cent  fare,  as  will  be  discussed  later,  it  has  progressed  as  much 
or  more  than  any  other  American  city  in  the  solution  of  certain 
of  Its  street  railway  problems.    A  service-at-cost  plan  is  in  oper- 
ation in  Cleveland.    The  main  features  of  this  plan  are  that  the 
street  railway  is  assured  a  definite  rate  of  return  on  a  fixed  in- 
vestment value,  and  that  a  sliding  schedule  of  fares  is  arranged 
If  a  certam  fare  does  not  provide  the  proper  revenue,  a  fare 
slightly  higher  is  put  into  effect.     If,  however,  the  particular 
fare  m  operation  yields  more  than  the  specified  return,  the  next 
lower  fare  goes  into  effect.    There  is  a  reserve  fund  which  acts 
as  a  balance  or  buffer  to  the  system,  preventing  constant  fluc- 
tuations of  fares  due  to  seasonal  conditions,  etc.,  but  so  arranged 
that  substantial  decreases  or  increases  in  the  fund  automatically 
bring  into  action  higher  or  lower  fares,  as  the  case  may  be     At 
the  present  time  the  cash  fare  is  4  cents,  three  tickets  are  sold 
for  10  cents,  and  a  charge  of  1  cent  is  made  for  a  transfer  with 
no  rebate.    When  this  plan  was  first  put  into  operation  the  fare 
was  3  cents  cash  fare,  1  cent  transfer,  no  rebate.    The  fare  re- 
mained at  this  figure,  except  for  a  short  time,  until  December, 
1917,  when  two  increase  steps  were  made  reaching  the  present 
rate  of  4  cents  cash  fare,  three  tickets  for  10  cents,  1  cent  trans- 
fer and  no  rebate.    A  realization  of  what  a  1-cent  charge  for  a 
transfer  means  should  convince  any  one  that  it  is  a  misnomer 
to  refer  to  such  a  schedule  as  a  3-cent  fare.     Moreover    no 
change  is  given  in  Cleveland  by  the  conductor  if  a  nickel  is 
proffered  for  the  fare. 

Aside  from  the  matter  of  fares,  there  are  many  other  points 
of  interest  in  the  Cleveland  system.    The  city  appoints  a  street 
railway  commissioner  who  has  a  considerable  amount  of  control 
over  the  operation  of  the  lines  of  the  company.     In  this  city 
one  does  not  see  surface  cars  crawling  through  city  streets  be- 
hind a  string  of  vehicles.    The  patrons  of  the  railway  realize 
that  they  are  the  losers  when  traffic  is  delayed,  hence  the  street 
cars  have  the  right  of  way.    The  Commission  has  found  that  in 
similar  matters  the  public  appreciates  the  fact  that  the  quality 
of  the  street  car  service  is  governed  to  a  great  extent  by  the 
attitude  adopted  by  the  car  riders.    In  the  Cleveland  plan  ar- 
bitration  proceedings  have  been  provided,  but  these  proceedings 
have  been  used  but  once,  and  then  in  a  friendlv  fashion  on  a 


SENATE  —  No.  265. 


45 


matter  concerning  the  wisdom  of  certain  expenditures  in  con- 
nection with  new  plant  or  equipment.  More  detailed  informa- 
tion concerning  Cleveland  may  be  found  in  Appendix  F. 

Dallas,  Tex.,  has  recently  adopted  a  service-at-cost  plan, 
involving  certain  features  of  the  Cleveland  plan.  At  Dallas 
the  plan  calls  for  a  sliding  dividend  rate  as  well  as  a  sliding 
scale  of  fares.  It  is  provided  in  this  plan  that  as  the  fares  are 
decreased  in  the  scale  the  dividend  rate  is  increased.  This  plan 
provides,  however,  that  the  maximum  rate  of  fare  shall  be  used 
at  the  start,  rather  than  having  the  fares  start  in  the  middle  of 
the  schedule  as  at  Cleveland.  Thus  at  Dallas  there  is  not  a 
definite  guarantee  that  the  maximum  allowed  dividend  rate  will 
be  maintained. 

Other  plans  involving  some  form  or  other  of  partnership  have 
been  put  into  operation  in  Des  Moines,  Kansas  City  and  other 
places. 

The  foregoing  has  been  given  to  illustrate  what  has  been  done 
in  other  cities  in  recognition  of  the  fact  that  the  public  and  the 
street  railways  should  be  partners.  Unfortunately,  these  con- 
ditions have  not  prevailed  in  Massachusetts.  It  has  been  a 
common  practice  in  this  State  for  the  public  to  look  upon  the 
street  railway  companies  as  objects  of  suspicion  and  dislike. 
Whether  or  not  there  has  been  any  justification  in  the  past  for 
such  a  feeling,  such  thoughts  at  the  present  time  form  a  barrier, 
which  until  surmounted  precludes  even  the  possibility  of  a  sat- 
isfactory solution.  The  actions  of  local  authorities  in  the  past 
in  making  unreasonable  requirements  on  the  street  railways, 
even  though  perhaps  legal,  have  seriously  hindered  street  rail- 
way development. 

In  other  cities  improved  service  has  been  attained  by  skip- 
stops,  limited  cars  in  rush  hours  and  similar  devices.  In  order 
that  such  schemes  will  result  in  improved  service  the  co-oper- 
tion  of  the  public  is  vitally  necessary.  The  following  note  from 
a  recent  Boston  daily  newspaper  is  interesting:  — 

In  these  days  of  restricted  passenger  transportation  in  the  United 
States,  and  the  rush  of  flying  wedges  of  humanity  through  terminal  sta- 
tions to  board  steam  and  trolley  cars,  it  might  be  well  to  recall  that  "they 
also  serve  who  only  stand  and  wait."  Frequently  those  whohavenot  sought 
to  crowd  themselves  into  cars  already  filled,  but  have  stood  quietly  by 
and  waited  for  the  next  one,  have  found  better  accommodations,  and 


1 


« 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  -  No.  265. 


47 


almost  as  speedy  service.  Transportation  officials  in  charge  of  the  trolley 
systems  in  large  cities  declare  that  20  per  cent,  of  the  delays  and  incon- 
veniences in  the  surface,  elevated  and  tunnel  service  is  due  to  the  in- 
sistence of  patrons  on  riding  on  the  first  car,  notwithstanding  another  is 
following  close  behind. 

While  these  matters  individually  may  appear  small  they  do 
constitute  a  considerable  factor  in  the  street  railway  service  in 
this  State,  and  any  remedy  which  may  be  applied  to  them  will 
certainly  result  in  better  transportation  conditions. 

The  Commission  believes  that  a  proper  consideration  of  these 
matters  can  readily  result  in  comprehensive  plans,  which  will 
provide  increased  and  better  service,  and  will  make  provision 
for  a  rehabilitation  of  the  properties  of  the  street  railway  com- 
panies. 

Conclusions. 
After  a  careful  study  of  the  present  situation,  relative  to  the 
street  railways  in  this  Commonwealth  and  of  the  causes  leading 
up  to  these  conditions,  this  Commission  has  reached  certain 
definite  conclusions.  The  entire  problem  concerning  street  rail- 
ways  must  be  approached  from  the  viewpoint  of  the  community 
of  interest  of  the  public  and  of  the  street  railway.  If  the  street 
railway  service  is  to  be  maintained,  improved  and  extended 
every  person  in  the  Commonwealth  must  be  brought  to  the 
realization  that  the  service  is  operated  in  his  interest  and  for  his 
benefit. 

Considerable  study  has  been  given  to  the  subject  of  public 
ownership  of  street  railways,  and  the  Commission  has  reached 
the  conclusion  that  public  ownership  at  this  time  is  unwise  in 
Massachusetts. 

Recommendations. 
The  Street  Railway  Investigation  Commission  makes  the  fol- 
lowing recommendations,  and  submits  in  Appendix  A  proposed 
legislation  embodying  these  recommendations. 

1.    Jitneys. 
This  Commission  recommends  that  the  so-called  jitney  be 
declared  a  common  carrier  and  placed  under  the  supervision  of 
the  Public  Service  Commission.    The  Public  Service  Commission 


shall,  if  it  deems  it  advisable,  bond  the  agencies  operating  such 
vehicles  to  such  extent  as  public  safety  may  require.  Proposed 
legislation  may  be  found  in  Appendix  A,  1. 

2.  Autos  operated  by  Street  Railways. 
This  Commission  recommends  that  the  street  railway  com- 
panies be  allowed  to  operate  motor  vehicles  (not  running  on 
rails  or  tracks)  as  auxiliaries  or  feeders.  Such  vehicles  shall  be 
placed  under  the  supervision  of  the  Public  Service  Commission 
to  the  same  extent  as  the  jitneys.  Proposed  legislation  will  be 
found  in  Appendix  A,  2. 

3.     Trolley  Freight. 

This  Commission  recommends  that  the  authority  to  grant 
permits  to  street  railways  to  become  common  carriers  of  news- 
papers, baggage,  express  matter  and  freight,  now  vested  in  the 
local  authorities,  shall  be  transferred  to  the  Public  Service 
Commission.  Proposed  legislation  will  be  found  in  Appendix 
A,  3. 

4.     Taxaiion  and  Highway  Maintenance, 

This  Commission  recommends  the  abolition  of  the  commuta^ 
tion  or  excise  tax  and  the  passage  of  an  act  requiring  street 
railways  to  maintain  in  good  repair,  but  not  to  renew  or  re- 
place, the  paving,  upper  planking  or  other  surface  material,  or 
the  base  thereof,  between  the  rails  and  tracks,  and,  in  the  case 
of  unpaved  streets,  for  18  inches  outside  the  rails.  When  this 
surface  is  renewed  or  replaced  by  the  municipality  it  shall 
assess  on  the  street  railway  company  one-half  of  the  labor  cost 
incurred  in  such  renewals  or  replacements  in  the  portion  of  the 
highways  between  the  tracks.  The  remainder  of  the  labor  cost 
and  the  entire  material  cost  shall  be  borne  by  the  municipality. 
This  act  shall  include  the  Boston  Elevated  and  its  leased  lines, 
and  any  conflicting  statutes  shall  be  hereby  repealed.  Proposed 
legislation  will  be  found  in  Appendix  A,  4. 

5.     Alteration  of  Location  of   Tracks  to  allow  for  the   Use  of 

Improved  Equipment, 
This  Commission  recommends  that  if  a  municipality  refuses 
to  grant  a  street  railway  permission  to  alter  its  tracks  in  order 


48 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


49 


that  a  more  improved  type  of  equipment  may  be  used,  the  right 
of  appeal  shall  be  had  to  the  Public  Service  Commission  on  this 
matter.  The  Public  Service  Commission  shall  then,  after  notice 
and  a  public  hearing,  determine  whether  public  necessity  and 
convenience  require  the  granting  of  such  petition,  and  shali  then 
dismiss  the  petition  or  require  the  street  railway  to  make  the 
necessary  alteration  in  the  location  of  its  tracks.  Proposed 
legislation  will  be  found  in  Appendix  A,  5. 

6.  Alteration  of  Location  of  Street  RaUway  Tracks  in  Highways. 
This  Commission  recommends  that  if  an  alteration  is  made  in 

the  location  of  street  railway  tracks  in  highways,  no  portion  of 
the  expenses  of  such  changes  shall  be  borne  by  the  street  rail- 
way,  except  when  such  alterations  are  made  upon  petition  of 
the  street  railway  company.  Proposed  legislation  will  be  found 
in  Appendix,  A,  6. 

7.  AUeration  or  ConMrm^ion  of  Bridges  upon  which  Street  Rail-- 

way  Tracks  are  located  or  are  to  be  heated. 
This  Commission  recommends  that  street  railways  shall  not 
be  obliged  to  bear  any  expenses  in  connection  with  the  altera- 
tion, strengthening  or  construction  of  bridges  or  the  approaches 
thereto,  even  when  such  changes  may  be  due  in  part  to  the  fact 
that  street  railway  tracks  are  located,  or  are  to  be  located,  on 
such  bridges.  Proposed  legislation  may  be  found  in  Appendix 
A,  7. 

8.     Service-at-cost  Plan, 
This  Commission  has  visited  the  city  of  Cleveland,  where  a 
so-called  service-at-cost  plan  has  been  in  operation  for  several 
years.     Under  this  plan  a  sliding  scale  of  fares  is  provided  so 
that  the  fare  in  effect  at  any  time  is  just  sufficient  to  pay  for 
the  "cost  of  the  service,"  such  "cost  of  the  service"  including 
.   an  aUowance  for  depreciation  and  the  payment  of  a  definite  re- 
turn  on  a  fixed  investment  value.    A  reserve  fund  is  provided 
so  that  seasonal  or  other  temporary  conditions  will  not  cause  a 
continual  fluctuation  of  fares.    If  this  reserve  fund  becomes  di- 
minished beyond  a  certain  point  the  next  higher  schedule  of 
fares  is  put  into  effect.    Correspondingly,  if  this  fund  reaches  a 


point  substantially  above  its  normal  amount  the  next  lower 
schedule  of  fares  becomes  operative. 

The  present  schedule  of  fares  in  Cleveland  is  4  cents  cash 
fare,  three  tickets  for  10  cents,  1  cent  transfer  and  no  rebate. 
This  fare  schedule,  which  has  been  in  effect  only  a  month  or 
two,  represents  an  increase  of  two  steps  in  the  scale  since  last 
fall.  The  first  increase  was  so  slight  that  it  failed  to  yield  a 
substantial  change  in  the  revenue,  and  so  the  second  step  was 
made  shortly  after.  This  Commission  has  found  that  the  fares 
in  Cleveland  have  been  very  steady  under  the  operation  of  this 
plan,  and  there  has  been  no  evidence  of  rapid  fluctuations  of 
fares  and  consequent  unsettled  conditions. 

The  Cleveland  plan  provides  for  a  depreciation  reserve,  to 
which  definite  sums  shall  be  added  each  month  before  the  pay- 
ment of  dividends. 

The  investment  value  on  which  interest  and  dividend  returns 
are  to  be  made  was  fixed  in  the  franchise.  Provision  was  made 
for  additions  to  this  investment  value  of  such  funds  as  are  in- 
vested in  the  property,  with  the  approval  of  the  proper  author- 
ities. The  authorized  rate  of  return  is  fixed  at  5  per  cent,  on 
that  portion  of  the  investment  value  represented  by  bonded 
indebtedness,  and  6  per  cent,  on  the  remaining  portion  of  the 
investment. 

The  city  appoints  a  street  railroad  commissioner  to  supervise 
the  operation  of  the  street  railway  under  this  plan,  and  in  him 
is  vested  a  great  deal  of  authority. 

Various  other  features  of  this  plan  are  given  in  more  detail 
elsewhere  in  this  report.  The  Commission  has  become  con- 
vinced, both  as  a  result  of  its  visit  in  Cleveland,  and  due  to  its 
study  of  other  plans,  such  as  the  Dallas  service-at-cost  plan, 
that  such  plans  have  considerable  merit.  This  Commission  be- 
lieves that  the  adoption  in  Massachusetts  of  a  plan  whereby 
^  the  public  is  assured  satisfactory  service  at  the  lowest  possible 
cost,  whereby  the  street  railway  company  is  assured  a  satisfac- 
,tory  return  on  capital  honestly  and  prudently  invested,  and 
whereby  ample  provision  is  made  for  depreciation,  rehabilita- 
tion and  extensions  and  improvements  of  line,  will  place  the 
street  railways  once  more  on  a  sound  financial  basis,  so  that 
capital  needed  for  future  improvements  and  extensions  may  be 


!  I 


^^ 


\ 


50  REPORT  ON  STREET  RAILWAYS.  [Feb. 

readily  secured.  The  intent  of  this  Commission  is  that  such  a 
plan  will  provide  a  satisfactory  solution  of  the  problems  now 
confronting  most  of  the  street  railwaj-s  in  this  State.  This 
Commission  is  convinced  that  no  plan  other  than  direct  finan- 
cial assistance  by  the  municipalities  or  by  the  State  will  solve 
the  problems  of  some  of  the  poorer  lines,  which  cannot  earn 
even  their  operating  expenses  and  fixed  charges. 

Proposed  serA'ice-at-cost  plans  have  been  submitted  to  thU 
Commission  by  representatives  of  the  street  railwavs  and  the 
myestors,  as  well  as  by  the  members  of  the  Public  SeWice  Com- 
mission While  these  plans  are  based  on  the  fundamental  idea 
of  a  slidmg  scale  of  fares,  reserve  and  depreciation  funds,  and 
a  more  or  less  fixed  rate  of  return  on  a  fixed  investment  value 
the  details  yarj-  widely.  This  is  especially  true  in  the  case  of 
the  determmation  of  the  proper  investment  value  on  which 
returns  are  to  be  paid. 

The  problem  is  complicated  by  the  fact  that  in  Massachusetts 

most  of  the  street  railways  operate  in  several  cities  and  towns: 

for  mstance,  the  Boston   Elevated  operates  in  over  a  dozen 

municipalities,   while  the  Bay  State  operates   in   nearly  fifty 

cities  and  towns.    The  Cleveland  idea  of  supervision  by  the 

municipality  would  have  to  be  modified  considerably  to  fit  the 

Massachusetts  situation.     Apparently  some  method  involving 

the  division  of  the  State  into  districts  would  have  to  be  worked 

out,  and  such  details  could  not  be  finally  decided  upon  untU 

.t  was  known  which  street  railways  were  planning  to  accept 

this  plan.     0«mg  to  the  complexity  of  the  problem  and  the 

limited  time  at  its  disposal  this  Commission  has  not  deemed  it 

expedient  to  submit  a  definite  bill,  limiting  the  scope  of  the  plan 

at  this  stage  to  a  particular  set  of  provisions.  Four  service-at- 

cost  plans,  which  have  been  presented  before  this  Commission 

are  mcluded  in  Appendix  A,  8. 

This  Commission  recommends  the  adoption  of  a  service-at- 
cost  plan  which  shall  embody  the  following  fundamental  fea- 
tures:  — 

^''1:r  ^^l  ^'^^^^^^^^^^  of  a  sliding  scale  of  fares,  so  ar- 
ranged that  when  the  schedule  of  fares  in  operation  does  not  yield 
a  revenue  sufficient  to  pay  the  "cost  of  the  service"  the  next 
higher  schedule  of  fares  shall  become  effective,  and  so  that 


1918.] 


SENATE  —  No.  265. 


51 


when  the  fares  yield  a  revenue  greater  than  the  "cost  of  the 
service"  a  corresponding  decrease  in  the  rate  of  fares  shall  be 
made.         . 

Second.— The  creation  of  a  reserve  fund,  which  shall  be 
raised  by  each  street  railway  accepting  this  plan,  and  which 
shall  serve  as  a  balance  wheel  on  the  system,  so  that  a  rapid  fluc- 
tuation of  fares  due  to  seasonal  or  other  conditions  may  be 
eliminated. 

Third.  —  The  establishment  of  a  depreciation  and  mainte- 
nance fund,  so  that  the  street  railway  properties  shall  be  kept  up 
at  all  times  to  the  proper  operating  efficiency,  and  so  that  new 
and  improved  types  of  equipment  may  be  purchased  as  the  art 
of  street  railroading  advances. 

Fourth.  —  Provision  for  the  rehabilitation,  extension  and  im- 
provement of  lines  during  a  period  of  years  following  the  accep- 
tance of  this  plan. 

Fifth. —-A  director  to  be  appointed  by  the  Governor  of 
Massachusetts  to  the  board  of  directors  of  each  street  railway 
operating  under  this  plan. 

Sixth.  —  Superyision  of  the  street  railways  accepting  this 
plan  by  district  representatives,  appointed  by  the  Governor  or 
by  the  Public  Service  Commission;  these  local  supervisors  to 
report  to  the  Public  Service  Commission,  or  to  a  special  depart- 
ment thereof;  the  expenses  of  such  supervision  to  be  borne  by 
the  street  railway  companies,  but  in  no  case  to  exceed  a  certain 
fixed  percentage  of  the  operating  expenses  of  the  individual 
companies. 

iSeren/A.  —  Provision  for  arbitration  proceedings  relative  to 
certain  conditions  which  might  arise. 

Eighth.  —  Provision  whereby  the  State,  or  any  political  sub- 
division thereof,  may  purchase  the  entire  property  of  a  com- 
pany, accepting  this  plan,  at  its  determined  investment  value, 
or  under  any  other  provision  of  existing  or  future  statutes. 

Ninth.  —  A  return  to  the  investors  of  6  per  cent,  per  annum 
on  a  fixed  investment  value,  the  amount  of  such  investment 
value  to  be  determined  by  the  Public  Service  Commission,  and 
to  include  such  sums  as  have  been  prudently  and  honestly  in- 
vested and  conserved  with  proper  diligence,  due  consideration 
being  given  to  the  present  physical  condition  of  the  property; 


52  REPORT  ON  STREET  RAILWAYS.  [Feb. 

the  investment  value  from  time  to  time  to  be  increased  by  such 
sums  as  the  Public  Service  Commission  shall  certify  have  been 
prudently  spent  and  are  properly  chargeable  to  capital. 

,,  ™-  ~  '^^  acceptance  of  such  a  plan  to  be  optional  with 
tlie  mdividual  companies. 

El^enth.  -  Legislation  allowing  the  Boston  Elevated  (includ- 
ing Its  leased  lines)  to  accept  this  plan. 

Tu-elfth.  —  In  case  the  service-at-cost  plan  is  accepted  by  any 
street  railway  company,  such  funds  as  the  Public  Service  Com- 
mission shall  consider  necessary  for  the  establishment  of  the 
reserve,  depreciation  and  rehabilitation  funds,  or  for  improve- 
ments immediately  necessary,  shall  be  raised  by  an  issue  of 
capital  stock,  either  preferred  or  common. 

ACKNOWXEDGMENTS. 

This  Commission  wishes  to  express  its  indebtedness  to  all 
those  persons  who  have  given  so  freely  of  their  time  in  connec- 
tion with  this  investigation.  The  members  of  the  Public  Serv- 
ice Commission  have  at  all  times  coH)perated  with  this  Commis- 
sion  to  the  fullest  extent,  and  have  aided  materially  in  this 
study.  The  Commission  owes  much  to  the  street  railway  and 
the  public  officials  of  the  cities  it  visited,  who  afforded  the  mem- 
bers of  this  Commission  such  excellent  opportunities  to  learn  of 
street  railway  conditions  in  those  cities. 

A  considerable  amount  of  the  data  included  in  the  appendices 
of  this  report  has  been  collected  by  correspondence,  and  the 
Commission  wishes  to  take  this  opportunity  to  thank  these  per- 
sons who  have  so  readily  supplied  this  information.  The  Com- 
mission wishes  to  thank  Prof.  Martin  J.  Shugrue  of  the  Massa- 
chusetts Institute  of  Technology,  who  has  compiled  much  of  the 
data  relative  to  public  ownership  of  street  railways  and  to 
street  railway  conditions  in  foreign  countries. 

To  the  officials  of  the  cities  and  towns,  of  the  street  railway 
companies,  and  of  the  various  organizations  who  appeared  at 
the  hearings,  this  Commission  wishes  to  extend  its  thanks 

The  Commission  also  wishes  to  express  its  appreciation  of  the 
services  of  Mr.  Edward  J.  Dunn,  former  clerk  of  the  Commis- 
sion who  was  obliged  to  give  up  these  duties,  owing  to  pressure 
of  other  business,  and  of  those  of  Mr.  John  B.  Babcock   3d 


1918.] 


SENATE  —  No.  265. 


53 


clerk  of  the  Commission  during  the  latter  part  of  this  investi- 
gation. 

Messrs.  Gibbs,  Hays  and  Forbes,  all  of  whom  sign  this  report, 
present  certain  dissenting  statements  which  are  given  following 
the  signatures. 

Respectfully  submitted, 

m 

JOSEPH  W.  MARTIN,  Jr.,  Chairman, 

CHAS.  W.  ELDRIDGE. 

JAMES  L.  HARROP. 

JOHN  M.  GIBBS. 

MARTIN  HAYS. 

MICHAEL  J.  FITZ  GERALD. 

W.  CAMERON  FORBES. 

GURDON  W.  GORDON. 


54 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


55 


DISSENTING  STATEMENTS. 


Dissenting  Statement  of  John  M.  Gibbs. 
Although  having  signed  the  report  and  subscribed  to  the  gen- 
eral principles  contained  therein,  I  feel,  however,  that  further 
relief  should  have  been  granted  to  the  Boston  Elevated  in  the 
matter  of  tunnel  and  subway  charges  and  rentals,  in  order  that 
the  burden  of  street  railway  transportation  should  to  a  greater 
extent  be  distributed  between  the  car  riders  and  the  property 
o\\Tiers  and  business  men,  who  share  the  benefits  of  such  trans- 
portation equally  with  the  car-riding  public.  I  also  feel  that  in 
the  service-at-cost  plan,  as  recommended  in  the  report  of  the 
Commission,  capital  actually  and  honestly  invested  has  not 
been  sufficiently  safeguarded  under  the  method  of  determining 
the  "investment  value*'  as  recommended,  since  I  fear  that 
undue  consideration  may  be  given  to  the  present  physical  con- 
dition of  the  properties. 

JOHN  M.  GIBBS. 

Dissenting  Statement  of  Martin  Hays. 
So  far  as  the  Boston  Elevated  Railway  is  concerned,  I  favor 
the  principle  involved  in  the  service-at-cost  plan,  and  I  believe 
that  it  is  the  duty  of  the  Legislature  to  make  every  possible 
endeavor  to  maintain  a  5-cent  fare.  With  that  end  in  view  I 
advocate  the  reduction,  or  even  the  elimination,  of  subway  and 
tunnel  rentals,  and  the  remission  of  burdensome  contributions 
for  highway  and  bridge  construction  and  maintenance. 

MARTIN  HAYS. 


Dissenting  Statement  of  W.  Cameron  Forbes. 
I  sign  the  report  in  the  assumption  that  the  Public  Service 
Commission  will  consider  it  to  be  their  duty  to  save  the  street 
railways  of  Massachusetts  from  going  into  bankruptcy.  In 
determining  the  "investment  value"  provided  in  the  service-at- 
cost  plan,  I  think  the  sole  requirement  should  have  been  money 
prudently  and  honestly  invested,  and  if  the  Public  Service  Com- 
mission should  make  the  mistake  of  interpreting  the  words 
"requiring  consideration  of  the  present  physical  condition"  as 
requiring  a  further  appraisal  of  all  the  railways,  the  time  alone 
necessary  for  such  appraisal,  apart  from  the  cost,  will  be  disas- 
trous to  an  important  percentage  of  the  street  railways  in  this 
State,  and  will  nullify  in  a  large  measure  any  benefits  to  be 
hoped  from  this  legislation.  If  this  Commission  had  meant 
physical  valuation  it  would  have  said  so,  and  I  sign  the  report 
in  the  assumption  that  the  Public  Service  Commission  will  in- 
terpret the  words  "physical  condition"  to  mean  that  railways 
shall  be  allowed  to  avail  themselves  of  the  service-at-cost  plan 
to  the  full  value  of  the  money  prudently  and  honestly  invested, 
when  they  know  that  the  physical  condition  of  the  property  is 
such  as  to  assure  satisfactory  operation  and  safety  and  comfort 
to  the  traveling  public. 

I  concur  with  Messrs.  Gibbs  and  Hays  that  an  important 
proportion  of  subway  rentals  should  be  borne  by  the  com- 
munity, and  I  personally  believe  that  the  Boston  Elevated 
should  be  relieved  to  the  amount  of  at  least  one-half  of  the 
subway  rentals. 

I  feel  that  the  report  should  have  set  forth  the  principle  in 
which  I  feel  sure  every  member  of  the  Commission  will  concur, 
■—that  every  effort  should  be  made  to  keep  the  fares  low,  in 
order  to  reduce  the  burden  upon  the  riding  public. 

No  evidence  was  submitted  to  the  Commission  that  justifies 
the  charge  that  the  construction  of  subways  has  been  made  in 
Boston  to  boom  real  estate.  I  dissent  from  anything  in  the 
report  to  that  effect. 

W.  CAMERON  FORBES. 


56 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


57 


DISSENTING  REPORTS. 


Dissenting  Report  of  George  M.  Worrall. 
Private  ownership  and  operation  of  street  railways  under  the 
present  policy  in  Massachusetts  has  broken  do\m,  resulting  in 
loss  of  confidence  by  the  investor  because  of  depreciation  in 
value  of  their  stock  and  failure  to  pay  interest  on  the  same, 
and  of  the  riding  public  because  of  the  poor,  insufficient,  and, 
in  many  cases,  dangerous  service.  Any  plan  for  the  improve- 
ment of  these  conditions  must  be  based  upon  the  confidence 
and  good-will  of  both  the  investors  and  the  riding  public. 
This  co-operation  can  be  best  secured  by  public  ownership  of 
street  railways,  which  would  give  to  the  Commonwealth  com- 
plete control  of  service,  and  make  its  representatives  directly 
responsible  to  the  people.  I  therefore  recommend  that  the 
following  question  be  submitted  to  the  people  at  the  annual 
election  in  November,  1918:  "Shall  the  State  of  Massachusetts 
take  over  the  street  railway  systems  at  an  estimated  cost  of 
$250,000,000?" 

Investigation  of  the  condition  of  street  railways  proved  con- 
clusively that,  with  two  or  three  exceptions,  every  company  in 
the  State  is  facing  bankruptcy.  No  other  agency  comes  in  as 
close  contact  with  the  people,  has  as  much  to  do  with  valuation 
of  property  and  the  prosperity  of  the  workers,  and  the  Com- 
monwealth itself,  as  the  street  railway  system.  It  is  therefore 
imperative  that  relief  should  be  given  at  once.  Recognizing  the 
fact  that,  with  the  favorable  vote  of  the  people,  it  would  take 
at  least  two  years  to  work  out  a  plan  of  public  ownership,  and 
that  relief  must  come  at  once,  I  recommend  the  adoption  of  a 
service-at-cost  plan  which  will  give  the  representatives  of  the 
State  ample  power  for  regulation  of  service,  to  the  end  that  the 


service  in  Massachusetts  shall  be  of  the  high  standard  which  its 
people  have  a  right  to  expect,  and  which  will  insure  to  the  in- 
vestors the  return  of  6  per  cent,  on  their  honest  investment.  In 
order  to  make  this  possible  I  make  the  following  recommenda- 
tions: — 

1.  That  a  street  railway  commission  of  three  members  be 
appointed  by  the  Governor,  or  that  an  additional  member  be 
added  to  the  Public  Service  Commission,  making  six,  and  that 
three  members  of  that  Commission  be  designated  by  the  Gov- 
ernor as  a  street  railway  commission.    This  commission  is  — 

(o)  To  have  mandatory  powers  in  regard  to  service,  types  of 
cars  and  all  other  matters  relating  to  the  operation  of  street 
railways. 

(6)  To  determine  the  true  value  of  any  street  railway  which 
desires  to  adopt  the  service-at-cost  plan.  "True  value"  is  to 
mean  the  actual  cost  of  the  property  less  depreciation. 

(c)  To  order,  in  addition  to  the  reserve  and  depreciation 
funds,  provided  for  in  the  Commission's  report,  the  establish- 
ment of  a  rehabilitation  fund,  which  shall  be  not  less  than  5  nor 
more  than  10  per  cent,  of  the  true  valuation.  This  fund  is  to 
be  used  within  a  period  of  three  years  for  the  purchase  of  new 
machinery  and  cars  and  general  improvement  of  the  service. 

(d)  To  order  all  street  railways  in  Massachusetts  to  sell  all 
real  estate  in  their  possession,  not  actually  used  for  street  rail- 
way purposes,  within  one  year,  the  loss,  if  any,  to  be  charged 
over  a  period  of  ten  years  to  depreciation. 

(e)  Not  to  allow  street  railways  to  be  represented  at  the 
State  House  or  before  their  commission  by  other  than  their 
regular  attorneys  or  officers  of  the  company. 

2.  That  the  investor  shall  be  allowed  a  return  of  6  per  cent, 
on  the  true  value  of  the  property. 

3.  That  the  Commonwealth  of  Massachusetts  may  at  any 
time  take  over  all  the  property  of  a  street  railway  system  by 
paying  the  true  value  plus  any  amount  expended  for  improve- 
ments authorized  by  the  Commission. 

4.  That  the  franchise  tax  be  5  per  cent,  on  the  net  earnings, 
instead  of  the  tax  now  in  vogue. 

It  is  to  be  regretted  that  your  Commission  has  been  unable 
to  receive  any  information  from  the  Public  Service  Commission 
in  regard  to  the  investigation  which  they  have  been  making  of 


fl 


58 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


the  Boston  Elevated  system.  It  would  seem  as  if  some  help 
might  have  been  obtained  from  the  high-priced  expert  they  had 
in  their  employ  for  this  specific  purpose. 

Property  in  metropolitan  Boston  has  been  greatly  increased 
in  value  by  the  extension  of  the  Boston  Elevated  and  the  sub- 
way systems.     It  is  only  fair  that  because  of  these  increased 
values  and  rentals  the  general  taxpayer  should  relieve  the  strap 
hanger  of  some  of  the  expense  of  maintaining  this  system.     I 
therefore  recommend  that  the  Commonwealth  buy  the  subways, 
allow  the  Elevated  to  use  them  at  a  normal  rental,  and  assess 
an  amount  sufficient  to  pay  interest  and  cost  upon  the  district 
serA^ed.    It  is  my  opinion  that  if  this  plan  is  followed  fares  need 
not  be  increased  in  Boston,  and  that  after  the  war  is  ended, 
under  normal  conditions,  it  would  be  possible  to  have  a  4-cent 
fare  in  this  district.    Any  relief  given  the  Elevated  should  pro- 
vide  for  a  reduction  in  fares  to  Hyde  Park.    It  is  manifestly 
unfair  that  Hyde  Park  should  pay  the  price  they  now  do  while 
other  sections  pay  a  straight  5-cent  fare. 

There  are  many  roads  in  Massachusetts  which  cannot  come 
under  the  service-at^jost  plan.  While  most  of  them  pav  no 
dividends  they  are  of  vital  importance  to  the  community  which 
they  serve.  In  order  that  the  people  may  continue  to  have  the 
benefit  of  these  roads,  I  recommend  — 

1.  That  cities  and  counties,  by  vote  of  their  official  represent- 
atives, and  towns  by  vote  in  town  meeting,  shall  have  the 
right  to  appropriate  money  to  aid  in  the  operation  of  street 
railways. 

2.  To  abate  real  estate  taxes  and  to  relieve  street  railways  of 
repairing  between  tracks. 

3.  That  they  have  the  right  to  buy  street  railways  at  a  price 
not  to  exceed  their  true  value. 

I  concur  with  the  majority  of  the  Commission  in  the  reme- 
dies offered  for  — 

1.  Jitneys. 

2.  Autos  operated  by  street  railways. 

3.  Trolley  freight. 

4.  Taxation  and  highway  maintenance. 

5.  Alteration  of  location  of  tracks  to  allow  for  the  use  of 
improved  equipment. 

6.  Alteration  of  location  of  street  railway  tracks  in  highways. 


1918.1 


SENATE  —  No.  265. 


59 


7.  Alteration  or  construction  of  bridges  upon  which  street 
railway  tracks  are  located  or  are  to  be  located. 

As  all  parties  have  in  various  ways  contributed  to  the  down- 
fall of  the  street  railway,  it  would  be  wise  if  they  would  unite 
in  an  effort  towards  its  upbuilding,  in  order  that  the  splendid 
reputation  of  this  State  as  a  leader  be  maintained. 

Respectfully  submitted, 

GEO.  M.  WORRALL, 


Dissenting  Report  of  George  Bunting. 

In  my  judgment  the  provision  of  adequate  transportation 
facilities  is  as  clearly  a  public  function  as  the  provision  of  pure 
water,  and  a  function  quite  as  vital  to  the  public  health  and  the 
general  welfare  of  our  industrial  and  commercial  centers  of 
population. 

Intrusting  it  to  private  initiative  with  the  incentive  of  private 
profit  was  a  mistake  from  the  beginning,  and  the  longer  we 
delay  to  correct  it  by  taking  over  the  street  railways  under 
public  ownership  and  public  operation,  the  heavier  will  be  the 
cost  and  the  greater  the  handicap  of  fixed  charges  which  must 
be  met. 

If  the  recommendations  of  the  majority  are  adopted,  the  in- 
evitable result  will  be  greatly  to  increase  the  price  which  the 
State  will  ultimately  be  obliged  to  pay  in  taking  them  over. 

Public  ownership  is  generally  admitted  to  be  inevitable.  Its 
further  postponement  can  only  mean  the  further  enrichment  of 
private  individuals  at  the  expense  of  the  health  and  comfort 
of  the  traveling  public  and  the  perpetuation  of  unnecessarily 
high  cost  of  transportation. 

The  policy  of  regulation,  accompanied  by  financial  aid  from 
the  public  treasury,  has  been  thoroughly  tried,  and  has  proved 
a  dismal  and  confessed  failure.  The  farcical  results  of  State  rep- 
resentation on  the  Fitch  burg  and  Boston  &  Albany  director- 
ates can  hardly  be  forgotten. 

The  Federal  government  has  now  at  last  been  compelled  to 
take  over  the  railroads  as  a  war  measure,  as  the  only  possible 


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60 


REPORT  ON  STREET  RAILWAYS.  [Feb.     I     ^^^^'^ 


SENATE  —  No.  265. 


tn 


means  of  securing  the  efficiency  in  operation  which  private 
management  had  failed  to  provide,  and  which  is  indispensable 
to  the  successful  prosecution  of  the  war.  But  the  efficiency  in 
transportation  service  is  essential  in  peace  as  well  as  in  war 
and  the  breakdown  of  the  privately  owned  street  railwavs  in 
Massachusetts  has  been  and  is  much  more  complete,  tak^n  as 
a  whole,  than  that  of  the  steam  lines,  both  in  respect  to  the 
service  rendered  and  from  a  financial  standpoint. 

The  plan  of  private  ownership  of  transportation  facilities  is 
m  fact,  so  fundamentally  wrong  in  principles  that  it  can  never 
be  made  successful  by  any  makeshift  proposition.  The  interest 
of  the  managers  and  shareholders  is  necessarilv  diametrically 
opposed  to  the  public  interest.  Their  interest  is  to  secure  from 
the  travehng  public  the  highest  possible  dividends  and  salaries 
that  the  traffic  will  bear,  or,  in  other  words,  to  make  the  car- 
mile  earnmgs  yield  larger  dividends;  but  they  imply  also  short 
hauls  and  cars  crowded  by  strap  hangers. 

It  is  also  to  the  interest  of  street  railways  to  congest  city 
populations  in  the  smallest  possible  compass,  whUe  it  is  to  the 
mterest  of  the  community  to  distribute  population  as  widely 
as  may  be.    Rightly  considered,  transportation  is  the  control- 
Img  factor  m  the  better-housing  problem  and  the  attempt  to 
provide  opportunities  for  wholesome  living  and  health-giving 
recreation  for  the  vast  majority  of  city  dwellers.     High  rents 
and  madequate  housing,  with  the  insanitary  conditions  of  travel 
m  overcrowded  street  cars,  are  costly  consequences  of  private 
ownership  of  the  means  of  transit  in  comparison  with  which  the 
excessive  fares  which  fictitious  capitalization  and  past  wastes 
of  management  are  now  obliging  the  companies  to  demand 
shrink  into  relative  insignificance. 

City  planning,  the  abolition  of  the  slums,  and  the  social-wel- 
fare aims  all  must  rest  satisfied  with  hardly  perceptible  mitiga- 
tions of  the  evils  of  congestion  until  we  have  public  ownership 
ot  the  street  railways,  for  private  ownership  does  not  and  never 
can  permit  the  city  to  build  in  a  far-sighted  wav,  or  to  treat 
transit  as  an  integral  part  of  city  building.  And  the  effect  of 
private  ownership  upon  the  high  cost  of  living  is  apparent  at 
once. 

These  are  lessons  which  Europe  learned  long  ago,  after  private 
ownership  under  public  regulation  had  been  thoroughly  tested 


and  found  ever^n^here  to  be,  as  Bismarck  declared  forty  years 
ago,  a  complete  failure. 

All  the  countries  of  Europe,  except  Great  Britain  and  France, 
have  long  owned  their  steam  railroads,  and  except  in  France 
and  Belgium  the  street  railways  are  generally  under  public 
ownership  also.  In  none  of  these  countries  is  there  any  move- 
ment away  from  the  public  ownership,  for  in  all  of  them  better 
and  cheaper  service,  shorter  hours  and  better  wages  for  em- 
ployees, and  a  more  scientific  and  economical  development 
have  resulted  from  public  ownership  and  operation  in  those 
countries. 

The  political  evils  which  result  from  private  ownership  of 
transportation  facilities  are  too  notorious  to  require  extended 
comment,  although  these  evils  themselves  would  justify  taking 
over  the  lines  even  if  none  of  the  other  advantages  which  have 
been  enumerated  were  to  be  expected.  If  our  public  servants 
are  so  much  more  ineflScient  and  corrupt  that  the  benefits  which 
have  resulted  from  public  ownership  abroad  are  not  to  be  hoped 
for  here  —  a  slander  w^hich  the  comparative  records  of  the 
publicly  owned  post  ofiice  and  the  privately  owned  express 
companies  ought  sufficiently  to  refute  —  the  transportation 
corporations  more  than  any  other  single  corrupting  agency  are 
responsible.  So  long  as  the  money  and  the  influence  of  the 
transportation  corporations  continue  to  be  felt  in  elections  and 
appointments  to  office  we  shall  have  a  public  service  honey- 
combed by  corporation  agents,  and  the  profession  of  politics, 
which  ought  to  claim  the  best  of  our  citizenship,  will  continue 
to  be  in  disrepute,  especially  in  our  own  large  cities,  among 
the  very  individuals  who,  by  intelligence,  business  capacity  and 
public  spirit,  are  best  adapted  for  public  trusts. 

The  national  crisis  is  bringing  such  men  to  the  public  service 
by  thousands  to-day.  When  the  managers  of  our  street  car 
lines  are  relieved  of  the  necessity  of  currying  favor  with  finan- 
cial magnates,  of  running  elections,  and  of  placating  politicians, 
the  direction  of  local  transportation  will  also  be  recognized  uni- 
versally as  an  honorable  and  patriotic  service,  and  will  attract 
public-spirited  citizens  who  may  now  be  repelled  from  it. 

Respectfully  submitted, 

GEORGE  BUNTING. 


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a2 


REPORT  ON  STREET  RAILWAYS.  [Feb.  1918. 


Dissenting  Report  of  John  L.  Donovan. 

I  dissent  from  the  report  of  this  Commission,  since  I  believe 
that  this  matter  should  be  considered  further  in  the  interests  of 
all  the  people  in  this  Commonwealth. 

I  believe  that  many  of  the  powers  delegated  to  the  Public 
Service  Commission,  when  it  was  formed  in  1913,  should  be 
taken  away  and  vested  once  more  in  the  Legislature.  When  the 
Railroad  Commission  was  enlarged  in  membership  and  its 
powers  increased  it  was  believed  that  better  conditions  would 
result  relative  to  street  railway  matters.  The  contrary,  has 
however,  been  the  case,  and  neither  the  people  nor  the  railways 
have  been  benefited.  During  the  period  since  the  establishment 
of  the  Public  Service  Commission  the  market  value  of  street 
railway  securities  has  dropped  to  a  great  extent,  and  the  service 
maintained  by  the  street  railways  has  dwindled. 

I  would  consider  any  means  of  relief  which  would  result  in  a 
fare  of  5  cents  or  less  in  Boston,  and  which  would  provide  the 
public  with  good  street  railway  service. 


APPENDICES. 


Respectfully  submitted, 


JOHN  L.  DONOVAN. 


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Appendix  A. 


PROPOSED  LEGISLATION. 


An  Act  relative  to  the  Powers  and  Duties  of  the  Public 

Service  Commission. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  Section  two  of  chapter  seven  hundred  eighty-four 
of  the  acts  of  the  year  nineteen  hundred  and  thirteen  is  hereby 
amended  by  adding  at  the  end  thereof  the  following: — d.  The 
transportation  and  carriage  of  persons  between  points  within  the 
commonwealth  upon  a  stage  route,  bus  line,  motor  vehicle  line 
or  route,  or  by  motor  vehicles  used  or  operated  in  connection 
therewith.  The  agency  operating  any  such  vehicle  or  over  any 
such  route  shall  be  required  to  obtain  a  certificate  of  public  con- 
venience and  necessity  for  such  operation,  in  thfe  manner  pro- 
vided in  section  seven  of  Part  III  of  chapter  four  hundred  and 
sixty-three  of  the  acts  of  the  year  nineteen  hundred  and  six, 
which  may  be  granted  upon  such  terms  and  conditions  as  the 
commission  may  prescribe,  including  description  of  route,  rate  of 
speed,  safeguarding  passengers  and  persons  using  public  ways  and 
places,  execution  and  delivery  of  a  bond,  with  sureties  satis- 
factory to  the  commission,  providing  security  for  the  perform- 
ance of  such  terms  and  conditions  and  for  the  payment  by  such 
owner  or  operator  of  damages  sustained  by  any  person  on 
account  of  such  operation  or  of  any  fault  or  negligence  in  respect 
thereto. 

Section  2.     This  act  shall  take  effect  upon  its  passage. 


2. 

An  Act  permitting  Street  Railway  Companies  to  use  Motor 

Vehicles. 
Be  it  enacted,  etc.,  as  follows: 

Section  1.  Any  street  railway  company,  in  addition  to  the 
business  of  a  common  carrier  which  it  has  heretofore  been  au- 
thorized to  conduct,  may,  by  the  affirmative  vote  of  two-thirds  of 


(1  ■  ■! 


66 


REPORT  ON   STREET  RAILWAYS. 


[Feb. 


1918.] 


SENATE  —  No.  265. 


67 


C'. 


all  its  issued  and  outstanding  capital  stock,  acquire,  own,  and 
operate  motor  vehicles  (not  running  on  rails  or  tracks)  for  the 
transportation  therein  for  hire  of  persons  and  property.  Any 
such  company  voting  to  exercise  the  authority  conferred  by  this 
act  shall,  with  respect  to  such  exercise,  be  subject  to  the  super- 
vision and  control  of  the  public  service  commission  and  to  all  the 
provisions  of  chapter  seven  hundred  and  eighty-four  of  the  acts 
of  the  year  nineteen  hundred  thirteen,  in  the  same  way  and  to 
the  same  extent  as  it  is  subject  thereto  with  r.espect  to  the  busi- 
ness it  has  heretofore  been  authorized  to  conduct. 
Section  2.    This  act  shall  take  effect  upon  its  passage. 

3. 

An  Act  relating  to  Street  Railway  Companies  as  Common 

Carriers. 
Be  it  enacted,  etc.,  as  follows: 

Section  1.  A  street  railway  company  upon  the  petition  of 
any  interested  party  may  be  authorized  to  become  a  common 
carrier  of  newspapers,  baggage,  express  matter  and  freight  in  such 
cases,  upon  such  parts  of  its  railway  and  to  such  extent  as  the 
public  service  commission  after  public  notice  and  a  hearing  shall 
determine  that  the  public  interests  and  convenience  require. 
Any  street  railway  company  acting  under  authority  so  granted 
shall  be  subject  to  such  regulations  and  restrictions  as  said  com- 
mission from  time  to  time  may  make,  and  shall  be  subject  to  the 
provisions  of  all  laws  now  or  hereafter  in  force  relating  to  common 
carriers  in  so  far  as  they  shall  be  consistent  herewith.  The  au- 
thority conferred  upon  any  street  railway  company  by  virtue  of 
the  provisions  of  this  act  may  be  modified  or  revoked  at  any  time 
by  said  commission  if  it  shall  determine  upon  investigation  and 
after  a  public  hearing  that  the  public  interests  so  require. 

Section  2.     This  act  shall  take  effect  upon  its  passage. 


An  Act  relative  to  the  Taxation  or  Street  Railway 
Companies  and  the  Repair  and  Maintenance  of  Pubuc 
Ways  and  Places  in  which  Street  Railways  are  lo- 
cated. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  Section  seventy-nine  of  Part  III  of  chapter  four 
hundred  and  sixty-three  of  the  acts  of  the  year  nineteen  hundred 
and  six  is  hereby  amended  by  striking  out  all  words  in  the  first 


six  lines  and  in  the  seventh  line  as  far  as,  but  not  including,  the 
word  "open"  and  inserting  in  place  thereof  the  words:  —  Every 
street  railway  company  shall  maintain  in  constant  repair,  to  the 
satisfaction  of  the  superintendent  of  streets,  street  commissioner, 
road  commissioners  or  surveyors  of  highways,  the  paving,  upper 
planking  or  other  surface  material,  and  the  base  thereof,  of  the 
portions  of  public  ways  and  bridges  occupied  by  its  tracks;  and 
if  such  tracks  occupy  unpaved  public  ways,  shall  in  addition  so 
maintain  in  constant  repair  eighteen  inches  on  each  side  of  the 
portion  occupied  by  its  tracks;  but  no  street  railway  company 
shall  be  required  to  repave  or  make  a  general  replacement  or  re- 
newal by  virtue  of  this  obligation  to  repair,  nor  by  reason  of  any 
obligation  which  may  have  been  imposed  in  any  grant  of  loca- 
tion. As  incident  to  its  corporate  franchise,  and  without  being 
subject  to  the  payment  of  any  fee  or  to  any  other  condition 
precedent,  a  street  railway  company  may  —  by  inserting  after  the 
word  "material",  where  it  occurs  in  the  seventeenth  and  twenty- 
second  lines,  the  words:  —  or  the  base  thereof, — by  inserting 
after  the  word  "surface",  in  the  thirty-first  line,  the  words:  — 
material,  or  the  base  thereof,  —  and  by  inserting  at  the  end 
thereof  the  sentence:  — The  provisions  of  this  section  shall  apply 
to  the  Boston  Elevated  Railway  Company  and  to  all  railways 
owned,  leased  or  operated  by  it,  —  so  that  said  section,  as 
amended,  shall  read  as  follows:  Section  79.  Every  street  railway 
company  shall  maintain  in  constant  repair,  to  the  satisfaction  of 
the  superintendent  of  streets,  street  commissioners,  road  commis- 
sioners or  surveyors  of  highways,  the  paving,  upper  planking  or 
other  surface  material,  and  the  base  thereof,  of  the  portions  of 
public  ways  and  bridges  occupied  by  its  tracks;  and  if  such 
tracks  occupy  unpaved  public  ways,  shall  in  addition  so  maintain 
in  constant  repair  eighteen  inches  on  each  side  of  the  portion 
occupied  by  its  tracks;  but  no  street  railway  company  shall  be 
required  to  repave  or  make  a  general  replacement  or  renewal  by 
virtue  of  this  obligation  to  repair,  nor  by  reason  of  any  obliga- 
tions which  may  have  been  imposed  in  any  grant  of  location.  As 
incident  to  its  corporate  franchise,  and  without  being  subject  to 
the  payment  of  any  fee  or  to  any  other  conditions  precedent,  a 
street  railway  company  may  open  any  street,  highway  or  bridge 
in  which  any  part  of  its  railway  is  located,  for  the  purpose  of 
making  repairs  or  renewals  of  the  railway,  or  of  any  part  thereof, 
and  the  superintendent  of  streets  or  other  officer  who  exercises 
like  authority,  or  the  board  of  aldermen  or  selectmen  shall  issue 
the  necessary  permits  therefor  in  a  city  or  town  in  which  such 


u 


68 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


are  required.  If,  during  the  original  construction  or  subsequent 
alteration  or  extension  or  the  making  of  any  such  repairs  or  re- 
newals of  any  railway  or  a  portion  thereof,  said  surface  material 
or  the  base  thereof  is  disturbed,  the  company  which  owns  or 
operates  such  railway  shall,  at  its  own  cost,  except  as  provided  in 
sections  sixty-five  and  seventy-one,  replace  to  the  reasonable 
satisfaction  of  the  superintendent  of  streets,  or  other  officer  who 
exercises  like  authority,  said  surface  material  or  the  base  thereof 
with  the  same  form  of  construction  as  that  which  was  disturbed, 
or,  by  first  obtaining  the  approval  thereof  by  such  ofiBcer,  with  a 
different  material  and  form  of  construction,  and  shall  restore 
said  street,  highway  or  bridge  to  as  good  condition  as  existed  at 
the  time  of  such  disturbances.  A  street  railway  company  shall 
be  liable  for  any  loss  or  injury  which  may  be  sustained  by  any 
person  in  the  management  and  use  of  its  tracks  and  during  the 
construction,  alteration,  extension,  repair  or  renewal  (A  its  rail- 
way, or  while  replacing  the  surface  material,  or  the  base  thereof, 
of  any  street  which  may  have  been  disturbed  as  aforesaid,  and 
which  results  from  the  carelessness,  neglect  or  misconduct  of  its 
agents  or  servants  who  are  engaged  in  the  prosecution  of  such 
work,  if  notice  of  such  loss  or  injury  is  given  to  the  company  and 
an  action  therefor  is  commenced  in  the  manner  provided  by  sec- 
tion twenty  of  chapter  fifty-one  of  the  Revised  Laws.  The  pro- 
visions of  this  section  shall  not  affect  the  obligations  of  any  street 
railway  company  in  respect  of  the  construction  or  maintenance  of 
any  bridge  or  part  thereof  which  any  private  person  or  corpora- 
tion may  be  liable,  in  whole  or  in  part,  to  construct  or  maintain. 
The  provisions  of  this  section  shall  apply  to  the  Boston  Elevated 
Railway  Company  and  to  all  railways  owned,  leased  or  operated 
by  it. 

Section  2.  On  or  before  the  first  day  of  November,  annually, 
the  assessors  of  every  city  and  town  shall  assess  on  every  com- 
pany operating  a  street  railway  or  electric  railroad  therein,  in- 
cluding any  company  whose  lines  are  located  partly  within  and 
partly  without  the  limits  of  the  commonwealth,  whether  chartered 
or  organized  under  the  laws  of  this  commonwealth  or  elsewhere, 
and  including  the  Boston  Elevated  Railway  Company,  an  excise 
tax  of  an  amount  equal  to  one  half  of  the  amount  expended  or  in- 
curred for  labor,  during  the  twelve  months  ended  upon  the 
thirtieth  day  of  the  preceding  September,  by  such  city  or  town, 
or  by  the  Massachusetts  highway  commission  within  the  limits 
of  such  city  or  town,  in  repaving  or  in  making  a  general  replace- 


1918.] 


SENATE  —  No.  265. 


69 


ment  or  renewal  of  the  paving,  upper  planking  or  other  surface 
material,  or  the  base  thereof,  of  the  portions  of  public  ways  and 
bridges  occupied  by  the  tracks  of  said  company.  The  Massa- 
chusetts highway  commission  is  hereby  directed  to  furnish,  on  or 
before  the  fifteenth  day  of  October  annually,  a  certificate  to  the 
assessors  of  any  city  or  town,  in  such  detail  as  may  be  necessary 
to  enable  the  assessors  to  comply  with  the  provisions  of  this  sec- 
tion, showing  the  amounts  expended  or  incurred  for  labor,  as 
aforesaid,  by  said  commission  within  the  limits  of  such  city  or 
town.  The  excise  tax  provided  by  this  section  shall  be  in  addi- 
tion to  the  taxes  otherwise  provided  by  law. 

Section  3.  On  or  before  the  first  day  of  November  in  each 
year  the  assessors  of  every  city  and  town  shall  notify  the  collector 
of  taxes  thereof  of  the  amount  of  the  excise  tax  assessed  therein 
under  the  provisions  of  section  two,  and  the  collector  shall  forth- 
with notify  the  treasurer  of  each  street  railway  and  electric  rail- 
road company  (including  the  Boston  Elevated  Railway  Company) 
of  the  amount  of  excise  tax  so  assessed  upon  it,  which  shall 
become  due  and  payable  within  thirty  days  after  the  receipt  of 
such  notice,  with  interest  after  the  first  day  of  December.  The 
provisions  of  Part  II  of  chapter  four  hundred  and  ninety  of  the 
acts  of  the  year  nineteen  hundred  and  nine,  so  far  as  appropriate, 
shall  apply  to  the  collection  of  such  excise  tax. 

Section  4.  Within  thirty  days  after  receiving  notice  of  the 
amount  of  the  excise  tax  assessed  upon  it  by  the  assessors  of  any 
city  or  town,  any  street  railway  or  electric  railroad  company 
(including  the  Boston  Elevated  Railway  Company)  aggrieved 
thereby  may  appeal  therefrom  by  filing  a  complaint  with  the 
clerk  of  the  county  commissioners  for  the  county  in  which  such 
city  or  town  is  situated,  or  of  any  board  exercising  the  powers  of 
such  commissioners.  If,  upon  a  public  hearing  after  due  notice 
to  such  city  or  town,  said  county  commissioners  or  said  board 
shall  find  the  amount  of  the  excise  tax  assessed  upon  said  com- 
pany to  be  in  excess  of  the  amount  which  should  properly  have 
been  assessed  under  the  provisions  of  section  two,  said  county 
commissioners  or  said  board  shall  make  a  reasonable  abatement 
and  an  order  as  to  costs.  A  company  whose  tax  is  thus  abated 
shall  be  entitled  to  a  certificate  thereof  from  the  board  making 
such  abatement,  and,  if  the  tax  has  been  paid,  shall  be  reimbursed 
by  the  city  or  town  to  the  amount  of  the  abatement  allowed, 
with  interest  from  the  time  of  payment  of  said  tax  and  all 
charges  paid  therewith.    If  no  abatement  is  granted,  said  county 


tsf 


'*■'. 


ii' 


70 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


commissioners  or  said  board  may  allow  the  city  or  town  its  ex- 
penses and  costs,  to  be  paid  by  the  company. 

Section  5.  Section  fifty-one  of  Part  III  of  chapter  four  hun- 
dred and  ninety  of  the  acts  of  the  year  nineteen  hundred  and  nine 
is  hereby  amended  by  striking  out  the  words  "of  the  preceding 
section",  in  the  third  line,  so  that  the  section  as  amended  shall 
read  as  follows:  —  Section  61 ,  All  taxes  which  are  collected 
from  a  street  railway  or  an  electric  railroad  company  and  paid  to 
a  city  or  town  under  the  provisions  of  section  sixty-five,  and  of 
section  twenty-eight  of  chapter  five  hundred  and  seventy-eight  of 
the  acts  of  the  year  eighteen  hundred  and  ninety-eight,  shall  be 
applied  in  the  case  of  street  railway  companies  toward  the  repair 
and  maintenance  of  the  public  ways  and  the  removal  of  snow 
therefrom  within  such  city  or  town,  and  in  the  case  of  electric 
railroad  companies  shall  be  applied  toward  the  construction,  re- 
pair and  maintenance  of  the  public  ways  and  places  in  which  the 
tracks  of  such  company  are  located,  and  to  the  removal  of  snow 
from  such  public  ways  and  places  within  such  cities  and  towns. 

Section  6.  Sections  forty-seven  to  fifty,  inclusive,  of  Part  III 
of  chapter  four  hundred  and  ninety  of  the  acts  of  the  year  nine- 
teen hundred  and  nine,  and  all  other  acts  and  parts  of  acts  in- 
consistent herewith,  and  any  portion  of  chapter  five  hundred 
and  seventy-eight  of  the  acts  of  the  year  eighteen  hundred  and 
ninety-eight  which  might  otherwise  be  held  to  prevent  the  appli- 
cation of  this  act  to  the  Boston  Elevated  Railway  Company  or 
to  any  railways  now  owned,  leased  or  operated  by  it,  are  hereby 
repealed. 

Section  7.     This  act  shall  take  effect  upon  its  passage. 

6. 

An  Act  relative  to  the  Alteration  of  Location  of  Tracks 
to  provide  for  improved  equipment. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  Section  sixty-five  of  Part  III  of  chapter  four  hun- 
dred and  sixty-three  of  the  acts  of  the  year  nineteen  hundred  and 
six,  as  amended,  is  hereby  further  amended  by  adding  at  the  end 
thereof  the  following:  —  If  the  board  of  aldermen  or  selectmen 
act  adversely  or  fail  to  act  within  sixty  days  from  the  date  of 
filing  the  petition  by  a  street  railway  company  requesting  au- 
thority to  alter  the  location  of  its  tracks  so  that  a  more  improved 
type  of  equipment   may   be   used,   in   order   to   provide   better 


1918.] 


SENATE  —  No.  265. 


71 


service,  the  petitioner  or  any  interested  party  may  file  such  pe- 
tition with  the  public  service  commission,  which  shall,  after  public 
notice  and  a  hearing  determine  whethfer  public  necessity  and  con- 
venience require  the  granting  of  such  petition,  and  shall  make  an 
order  dismissing  such  petition  or  requiring  the  street  railway  te 
make  the  necessary  alteration  in  the  location  of  its  tracks,  —  so 
that  the  section  will  read  as  follows:  —  Section  65.     The  board  of 
aldermen  of  a  city  or  the  selectmen  of  a  town,  upon  the  petition 
executed  in  accordance  with  by-laws  or  a  vote  of  the  directors  of 
a  street  railway  company  whose  tracks  are  located  in  said  city  or 
town,  or  upon  the  petition  of  any  interested  party,  after  public 
notice  and  a  hearing  as  provided  in  section  seven,  may  alter  the 
location  of  the  tracks  in  the  manner  prescribed  in,  and  subject  to 
the  provisions  of,  the  preceding  section.    Such  alteration  shall  be 
made   by   such   company   within   such   time,   and    the   expense 
thereof  shall  be  borne  by  such  party  or  parties  and  in  such  pro- 
portions as  the  board  of  aldermen  or  selectmen  may  determine. 
No  such  alteration  of  a  location  shall  be  valid  until  the  board  of 
railroad  commissioners,  after  public  notice  and  a  hearing,  shall 
certify  that  such  alteration  is  consistent  with  the  public  interests. 
If  said  board  requires  an  amendment  to  such  alteration  before 
certifying  that  the  same  is  consistent  with  the  public  interests, 
said  board  shall  notify  the  board  of  aldermen  or  selectmen  of 
such  amendment;  and  thereafter  said  board  of  aldermen  or  select- 
men may  amend  such  alteration  in  accordance  with  the  said 
amendment:  provided,  that,  if  such  amendment  involves  a  change 
in  the  route  of  the  railway,  public  notice  and  a  hearing  shall  be 
given  as  hereinbefore  provided  in  the  case  of  the  original  applica- 
tion for  an  alteration;   and  thereafter  the  board  of  railroad  com- 
missioners may,  as  a  part  of  the  original  proceedings  before  it, 
certify  that  such  alteration  so  amended  is  consistent  with  the 
public  interests.     An  alteration,  so  certified  to  be  consistent  with 
the  public  interests,  shall  be  a  valid  location,  if,  within  sixty  days 
after  the  issue  of  notice  of  said  certification  to  the  company,  it 
shall   file   a   written   acceptance  of  such   alteration,  executed  in 
accordance  with  its  by-laws  or  a  vote  of  its  directors,  with  the 
board  of  aldermen  or  selectmen.     If  the  board  of  aldermen  or 
selectmen  act  adversely  or  fail  to  act  within  sixty  days  from  the 
date  of  filing  the  petition  by  a  street  railway  company  requesting 
authority  to  alter  the  location  of  its  tracks  so  that  a  more  im- 
proved type  of  equipment  may  be  used,  in  order  to  provide  better 
service,  the  petitioner  or  any  interested  party  may  file  such  pe- 


Kil 


II 


72 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


tition  with  the  public  service  commission,  which  shall,  after 
public  notice  and  a  hearing  determine  whether  public  necessity 
and  convenience  require  the  granting  of  such  petition,  and  shall 
make  an  order  dismissing  such  petition  or  requiring  the  street 
railway  to  make  the  necessary  alteration  in  the  location  of  its 
tracks. 
Section  2.     This  act  shall  take  effect  upon  its  passage. 

e. 

An  Act  relative  to  the  Alteration  of  Location  of  Street 

Railway  Tracks  in  Highways. 

Be  it  enactedf  etc.,  as  follows: 

Section  L  Section  sixty-five  of  Part  III  of  chapter  four  hun- 
dred and  sixty-three  of  the  acts  of  the  year  nineteen  hundred  and 
six,  as  amended  by  section  three  of  chapter  four  hundred  and 
seventeen  of  the  acts  of  the  year  nineteen  hundred  and  nine,  is 
hereby  further  amended  by  inserting  after  the  word  "determine", 
in  the  twelfth  line,  the  following :  —  protidedf  however,  the  expense 
of  such  alteration  shall  be  borne  by  the  street  railway  company 
only  when  made  upon  the  petition  of  such  company. 

Section  2.  Part  III  of  said  chapter  four  hundred  sixty-three 
of  the  acts  of  the  year  nineteen  hundred  and  six  is  hereby 
amended  by  striking  out  section  sixty-eight,  and  substituting  the 
following:  —  Section  68.  If  a  street  or  highway  in  which  the 
tracks  of  a  street  railway  company  have  been  located  for  a  period 
of  five  years  is  altered,  or  if  the  grade  thereof  is  changed  under 
the  provisions  of  chapters  forty-eight  or  fifty  of  the  Revised 
Laws,  the  company  shall  not  be  required  to  bear  any  portion  of 
the  expense  thereof. 

Section  3.  Section  seventy.  Part  III  of  said  chapter  four 
hundred  and  sixty-three,  as  amended  by  section  four  of  chapter 
four  hundred  and  seventeen  of  the  acts  of  the  year  nineteen  hun- 
dred and  nine,  is  hereby  further  amended  by  striking  out  section 
seventy  and  substituting  the  following:  —  Section  70.  If  the 
board  of  aldermen  of  a  city  or  the  selectmen  of  a  town  and  a 
street  railway  company  having  a  location  in  a  way  which  said 
aldermen  or  said  selectmen  or  the  county  commissioners  of  the 
county  in  which  said  city  or  town  lies  have  in  writing  requested 
the  commonwealth  to  take  charge  of,  make  application  to  the 
Massachusetts  highway  commission,  and  with  the  application 
submit  satisfactory  plans,  profiles  and  cross-sections  of  said  way, 


1918.] 


SENATE  —  No.  265. 


73 


the  commission  shall  indicate  on  such  plans,  profiles,  cross-sec- 
tions a  location  and  grade  for  the  tracks  of  said  street  railway 
company.  If  the  commission  considers  said  way  suitable  for  a 
state  highway,  the  commission  shall  pay,  out  of  the  appropria- 
tions for  the  construction  and  repair  of  state  highways,  the 
damages  sustained  by  a  person  whose  property  may  be  injured 
by  the  construction  of  such  state  highway  and  the  cost  of  grading 
the  said  way  to  the  lines  established  by  the  Massachusetts  high- 
way commission.  A  way  which  is  graded  under  the  provisions  of 
this  section  shall  remain  a  town  way  or  a  highway,  subject  to  all 
laws  relative  thereto,  until  said  way  is  taken  charge  of  as  a  state 
highway  by  the  commonwealth. 
Section  4.     This  act  shall  take  effect  upon  its  passage. 

7. 

An  Act  relative  to  the  Alteration  or  Construction  of 
Bridges  upon  which  Street  Railway  Tracks  are 
located  or  are  to  be  located. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  Section  twenty-three  of  Part  I  of  chapter  four 
hundred  and  sixty-three  of  the  acts  of  the  year  nineteen  hundred 
and  six,  as  amended  by  section  one  of  chapter  five  hundred  and 
forty-two  of  the  acts  of  the  year  nineteen  hundred  and  eight,  and 
by  section  one  of  chapter  forty-seven  of  the  acts  of  the  year 
nineteen  hundred  and  nine,  is  hereby  further  amended  by  striking 
out  the  last  sentence  thereof,  and  by  striking  out  the  words  "rail- 
road commissioners"  and  substituting  the  words: — public 
service  commission,  —  so  that  said  section  will  read  as  follows:  — 
Section  23.  If  a  public  way  and  a  railroad  cross  each  other,  and 
the  board  of  aldermen  of  the  city  or  the  selectmen  of  the  town  in 
which  the  crossing  is  situated,  or  the  directors  of  the  railroad  cor- 
poration, or  the  directors  of  a  street  railway  company  having 
tracks  on  the  said  way  are  of  opinion  that  it  is  necessary  for  the 
security  or  convenience  of  the  public  that  an  alteration  which 
does  not  involve  the  abolition  of  a  crossing  at  grade  should  be 
made  in  the  crossing,  the  approaches  thereto,  the  location  of  the 
railroad  or  way,  or  in  a  bridge  at  the  crossing,  they  shall  apply  to 
the  county  commissioners,  or,  if  the  crossing  is  situated,  in  whole 
or  in  part,  in  the  city  of  Boston,  to  the  public  service  commission, 
who  shall,  after  public  notice,  hear  all  parties  interested,  and  if 
they  decide  that  such  alteration  is  necessary,  shall  prescribe  the 


I 


■-WSK3 


if 


I  ; 


74 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


manner  and  limits  within  which  it  shall  be  made,  and  shall  forth- 
with certify  their  decisidn  to  the  parties  and  to  said  board.  This 
proceeding  may  include  any  case  where  there  is  need  of  the  re- 
building of  a  highway  bridge  or  any  structural  change  or  renewal 
for  the  purpose  of  strengthening  or  improving  it. 

Section  2.  Section  twenty-five  of  Part  I  of  said  chapter 
four  hundred  and  sixty-three  is  hereby  amended  by  striking  out 
the  words  "the  street  railway  company  having  tracks  in  said 
way",  in  the  tenth  and  eleventh  lines,  and  also  the  last  sentence, 
so  as  to  read  as  follows:  —  Section  25.  A  special  commission  of 
three  disinterested  persons,  who  shall  be  appointed  as  provided 
in  the  following  section,  shall  determine  which  party  shall  carry 
such  decision  into  effect  and  which  party  shall  pay  the  charges 
and  expenses  of  making  such  alteration  and  the  future  charges 
for  keeping  such  bridge  or  crossing  and  the  approaches  thereto  in 
repair,  as  well  as  the  cost  of  the  application  to  the  county  com- 
missioners, or  the  board  of  railroad  commissioners  and  of  the 
hearing  before  said  special  commission;  and  it  may  apportion  all 
such  charges,  expenses  and  costs  between  the  railroad  corpora- 
tion and  the  counties,  cities  or  towns  in  which  said  crossing  is 
situated  and  other  cities  and  towns  which  may  be  specially  bene- 
fited. 

Section  3.     This  act  shall  take  effect  upon  its  passage. 

8a. 

An  Act  relative  to  Street  Railway  Service  at  Cost. 
Be  it  enacted f  etc.,  as  follaws: 

Section  1.  Any  company  operating  a  street  railway,  as  de- 
fined in  section  one  of  Part  III  of  chapter  four  hundred  sixty- 
three  of  the  acts  of  the  year  nineteen  hundred  and  six,  whether 
organized  under  general  or  special  law,  may  accept  the  provisions 
of  this  act  in  the  manner  hereinafter  provided.  Any  street  rail- 
way company  which  shall  so  accept  the  provisions  of  this  act 
shall  after  the  determination  of  the  investment  value  of  its  prop- 
erty as  hereinafter  provided  furnish  transportation  at  cost.  Cost 
shall  include  all  operating  expenses,  taxes,  rentals,  provision  for 
depreciation  to  be  fixed  by  the  commission,  and  an  interest  re- 
turn upon  the  investment  value  of  the  property  as  hereinafter 
provided. 

Section  2.     In  determining  the  investment  value  of  the  prop- 
erty of  an  accepting  company  (hereinafter  called  the  company) 


1918.] 


SENATE  —  No.  265. 


75 


the  public  service  commission  (hereinafter  called  the  commission) 
shall  include  the  following  items:  — 

(a)  The  cash  actually  paid  to  the  company  for  issues  of  its 
stock,  bonds  and  other  obligations  which  have  been  approved  by 
the  commission  or  by  the  board  of  railroad  commissioners. 

(6)  The  face  or  par  value  of  its  stock,  bonds  and  other  obliga- 
tions issued  for  property  where  the  commission  or  the  board  of 
railroad  commissioners  have  determined  that  the  value  of  such 
property  is  equal  to  the  par  or  face  value  of  the  securities  issued 

therefor. 

(c)  In  cases  where  issues  of  stock  or  of  bonds  or  other  obliga- 
tions payable  at  periods  of  more  than  twelve  months  after  the 
date  thereof  have  not  been  approved  by  the  commission  or  by 
the  board  of  railroad  commissioners,  or  the  same  have  been 
issued  for  property  without  any  determination  by  the  commission 
or  by  the  board  of  railroad  commissioners  that  the  value  of  such 
property  is  equal  to  the  par  or  face  value  of  the  securities  issued 
therefor,  such  amount  as  the  commission  shall  determine  to  repre- 
sent the  fair  cost  of  such  property  to  the  extent  that  the  same  is 
within  the  commonwealth,  or  when  cash  was  paid  the  amount  of 
cash  actually  received  by  the  company  for  such  securities. 

Section  3.  In  case  the  company  has  leased  the  entire  prop- 
erty of  another  company,  and  the  operation  of  the  two  companies 
or  their  financial  affairs  have  become  so  clearly  associated  that  in 
the  opinion  of  the  commission  it  would  be  convenient  or  ad- 
visable to  regard  the  said  properties  as  a  unit,  the  commission 
may  include  the  properties  of  the  lessor  company  in  the  invest- 
ment value  of  the  property  of  the  lessee  company;  but  in  such 
case  the  rent  paid  by  the  lessee  to  the  lessor  shall  not  be  included 
in  operating  expense,  but  shall  be  paid  by  the  lessee  company 
from  its  interest  return. 

Section  4.  If  the  investment  value  of  the  property  of  a  com- 
pany has  been  determined  within  three  years  of  the  date  of  the 
passage  of  this  act,  the  amount  so  determined,  with  the  addition 
of  amounts  subsequently  expended  as  found  by  the  commission, 
shall  be  deemed  the  investment  value. 

Section  5.  If  upon  the  determination  of  the  investment  value 
of  the  company's  property  by  the  commission  it  appears  that  the 
company  has  not  during  any  year  in  the  five  fiscal  years  of  such 
company  preceding  such  determination  reported  to  the  commis- 
sion or  the  board  of  railroad  commissioners  an  operating  income 
of  at  least  four  per  cent  upon  such  investment  value,  such  com- 


i 


76 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


pany  shall  be  excluded  from  the  operation  of  this  act,  and  its 
acceptance  thereof  shall  be  void  and  of  no  effect,  and  no  further 
proceedings  shall  be  had  hereunder:  provided,  however,  that  such 
company  by  a  vote  of  not  less  than  a  majority  of  its  stockholders 
entitled  to  vote  may  elect  to  accept  a  reduced  investment  value 
of  not  more  than  the  amount  upon  which  it  has  so  reported  an 
operating  income  of  four  per  cent,  and  upon  such  vote  it  shall  be 
included  in  the  operation  of  this  act. 

Section  6.  The  investment  value  of  the  property  of  the  com- 
pany shall  be  increased  from  time  to  time  by  the  following 
items:  — 

(a)  The  face  or  par  value  of  stock,  bonds  and  other  obligations 
issued  for  property  and  with  the  approval  of  the  commission. 

(b)  Cash  received  by  the  company  in  respect  to  issues  of  its 
stock,  bonds  and  other  obligations  which  have  been  approved  by 
the  commission. 

(c)  Any  portion  of  the  interest  return  which  the  company  may 
expend  for  additions  or  improvements. 

Section  7.  If  the  company  is  dissatisfied  with  the  determina- 
tion by  the  commission  of  the  investment  value  of  its  property 
it  may  appeal  to  the  supreme  judicial  court  from  the  determina- 
tion of  the  commission.  Until  the  final  adjudication  of  such 
appeal  the  investment  value  shall  be  the  amount  determined  by 
the  commission:  provided,  however,  that  if  the  supreme  judicial 
court  shall  find  an  investment  value  in  excess  of  the  amount  de- 
termined by  the  commission  the  company  shall  be  entitled  to  re- 
ceive the  interest  return  on  such  additional  amount  from  the  date 
of  its  acceptance  of  the  provisions  of  this  act. 

Section  8.  A  company  shall  forthwith,  upon  the  determina- 
tion by  the  commission  of  the  investment  value  of  its  property, 
provide  for  itself  a  reserve  fund  which  shall  not  be  less  than  three 
per  cent  nor  more  than  six  per  cent  of  such  investment  value. 
The  reserve  fund  shall  be  available  as  an  equalizing  fund  to  pro- 
vide for  unexpected  or  unusual  contingencies  in  the  business,  due 
to  seasonal  or  other  changes  temporarily  affecting  its  revenues. 
To  provide  the  reserve  fund  the  company,  notwithstanding  any 
provision  of  this  act  or  any  restrictions  imposed  by  the  laws  now 
in  force,  may  issue  such  stock,  bonds  or  other  obligations  as  the 
commission  may  approve.  The  subscribers  to  the  reserve  fund 
shall  pay  twenty-five  per  cent  of  their  subscription  upon  accept- 
ance of  the  act  by  the  company,  and  the  balance  may  be  paid  as 
follows:   twenty-five  per  cent  four  months,  twenty  per  cent  eight 


1918.] 


SENATE  —  No.  265. 


77 


months,  twenty  per  cent  fifteen  months,  and  ten  per  cent  eight- 
een months  thereafter.  When  paid  in  full  not  less  than  seventy 
per  cent  of  the  reserve  fund  shall  be  invested  in  bonds  of  the 
United  States  government,  and  the  uninvested  balance  shall  be 
deposited  in  a  special  bank  account  to  be  known  as  the  reserve 
fund  account.  If  at  the  end  of  any  calendar  year  the  investment 
value  of  the  properties  of  the  company  shall  be  increased  the 
company  shall  forthwith  proportionately  increase  its  reserve  fund 
so  that  the  amount  originally  contributed,  with  any  subsequent 
additions  from  sources  other  than  earnings,  shall  not  be  less  than 
three  per  cent  of  the  investment  value  of  its  properties. 

Section  9.  The  company  shall  provide  by  the  issue  of  securi- 
ties an  improvement  fund  to  an  amount  required  by  the  commis- 
sion but  not  exceeding  the  reserve  fund.  This  improvement  fund 
shall  be  fully  subscribed  within  sixty  days  after  determination  of 
the  investment  value  of  the  property  of  the  company,  and  shall 
be  paid  in  from  time  to  time  as  required  by  a  plan  of  gradual 
improvement  to  be  submitted  to  and  approved  by  the  commis- 
sion. 

Section  10.  The  company  shall  establish  a  depreciation  re- 
serve and  shall  pay  into  it  from  time  to  time  such  sums  as  the 
commission  shall  direct,  to  the  end  that  adequate  replacements 
and  renewals  shall  be  made  from  time  to  time. 

Section  11.  The  company  shall  also  establish  an  accident  re- 
serve, and  shall  pay  into  it  from  time  to  time  such  sums  as  the 
commission  shall  direct.  The  funds  deposited  in  this  reserve  shall 
be  used  to  pay  unusual  expenses  incident  to  losses  suffered  by  the 
company  on  account  of  persons  killed  or  injured. 

Section  12.  The  company  shall  be  entitled  to  receive  each 
month  an  interest  return  of  one-half  of  one  per  cent  of  the  in- 
vestment value  of  its  properties.  If  the  company  at  any  time 
finds  that  the  interest  return  above  provided  for  is  insufficient  to 
enable  it  to  procure  additional  funds  by  the  sale  of  its  securities, 
it  may  apply  to  the  commission,  which  may  permit  the  company 
to  increase  its  interest  return,  and  shall  also  determine  for  what 
length  of  time  the  increase  interest  return  shall  be  in  force. 

Section  13.  The  accounts  of  the  company  shall  be  kept  in 
such  manner  as  the  commission  shall  from  time  to  time  direct, 
provided  that  its  operating  revenues  from  whatever  source  de- 
rived shall  be  used  for  the  purposes  and  in  the  following  order:  — 

First.  —  To  pay  or  provide  for  the  payment  of  all  operating  ex- 
penses,  taxes,  rentals,   depreciation,   and   accident  reserves  and 


78 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


other  costs  properly  chargeable  against  income  or  surplus  under 
the  present  accounting  system  of  the  interstate  commerce  com- 
mission or  such  account  system  as  may  be  approved  by  the  public 
service  commission. 

Second.  —  To  set  apart  each  month  for  the  use  of  the  company 
an  interest  return  of  not  less  than  one  half  of  one  per  cent  of  the 
investment  value  of  its  properties. 

Third.  —  To  pay  the  balance  into  the  reserve  fund  of  the  com- 
pany. 

Section  14.  If  in  any  month  the  operating  revenues  of  the 
company  are  insufficient  to  meet  the  operating  costs  and  the 
interest  return  to  the  company,  as  provided  in  section  eleven 
hereof,  the  company  may  appropriate  from  the  reserve  fund  an 
amount  sufficient  to  meet  the  deficiency,  and  within  five  days 
shall  report  the  fact  to  the  commission. 

Section  15.  On  or  before  the  twenty-fifth  of  each  month  the 
company  shall  file  with  the  commission  a  statement  for  the 
calendar  month  next  preceding,  showing  — 

(a)  The  amount  of  operating  revenues  from  whatever  source 
derived. 

(6)  The  amount  paid  out  and  applied  under  each  of  the  sub- 
divisions of  section  twelve  hereof,  and  the  amount  on  deposit  in 
the  accident  reserve  and  in  the  depreciation  reserve. 

(c)  The  amount,  if  any,  paid  by  the  company  into  the  reserve 
fund. 

(d)  The  amount,  if  any,  appropriated  by  the  company  from 
the  reserve  fund  to  meet  the  deficiency  in  the  amount  of  return 
to  which  it  is  entitled  or  in  the  payments  which  it  is  required  to 
make. 

(e)  The  amount  of  reserve  fund. 

Section  16.  Immediately  upon  the  acceptance  of  this  act  the 
company  shall  file  with  the  commission  a  rate  schedule  which 
shall  provide  for  eight  grades  of  fare  and  transfer  privileges,  four 
of  which  will  produce  a  gradual  increase  and  four  of  which  will 
produce  a  gradual  decrease  in  its  present  operating  revenues,  and 
the  commission  within  sixty  days  thereafter  shall  approve  the 
said  schedule  or  shall  make  such  changes  therein  as  it  finds  ad- 
visable. All  changes  of  fare  made  or  required  to  be  made  by  the 
company,  in  the  manner  hereinafter  provided,  shall  be  in  accord- 
ance with  the  said  rate  schedule.  The  company  whenever  any 
change  of  fare  is  made  shall,  with  the  approval  of  the  commission, 
establish  and  add  to  its  rate  schedule  additional  grades  of  fare,  so 


1918.] 


SENATE  —  No.  265. 


79 


that  the  said  schedule  will  at  all  times  provide  four  successive 
grades  for  the  respective  increase  and  decrease  of  the  operating 
revenues  of  the  company.  If  at  any  time  it  shall  appear  in  the 
interest  of  the  public  or  of  the  company  that  the  said  schedule 
should  be  changed  either  with  regard  to  the  method  or  basis  upon 
which  the  fares  and  transfer  privileges  are  established,  or  because 
the  steps  between  the  different  grades  are  too  small  or  too  great, 
or  for  any  other  reason,  the  company  and  the  commission  may  by 
agreement  change  the  said  schedule. 

Section  17.    It  shall  be  the  duty  of  the  commission  to  see  to 
it  that  the  operating  revenues  of  the  company  shall  be  adequate 
to  maintain  the  reserve  fund  at  about  its  original  or  normal 
amount,  and  with  due  regard  to  the  uses  of  the  fund  as  stated  ift 
section  seven  hereof  it  shall  be  its  duty  to  require  the  company 
to  put  in  force  from  time  to  time  such  grade  of  fares  as  in  its 
opinion  will  be  adequate  to  maintain  the  reserve  fund  at  about 
its  normal  amount.     The  company  shall,  however,  without  any 
authorization  or  requirement  of  the  commission,  immediately  put 
in  force  the  next  succeeding  lower  grade  of  fare  as  shown  on  its 
rate  schedule  if  at  the  end  of  any  fiscal  year  its  reserve  fund  shall 
be  increased  to  fifty  per  cent  in  excess  of  its  original  or  normal 
amount,  and  if  after  operating  six  months  under  such  lower  grade 
of  fare  the  reserve  fund  shall  then  exceed  its  original  or  normal 
amount  by  more  than  twenty  per  cent  then  the  fares  of  the  com- 
pany shall  again  be  reduced  to  the  next  succeeding  lower  grade  in 
the  rate  schedule  herein  provided  for.     A  further  reduction  shall 
thereafter  be  made  at  intervals  of  six  months  by  steps  each  to 
the  next  lower  grade  of  fare  until  the  reserve  fund  shall  amount 
to  less  than  ten  per  cent  in  excess  of  its  original  or  normal 
amount.     If  at  the  end  of  ninety  days  from  the  acceptance  of 
this  act  the  reserve  fund  of  any  company  shall  have  been  reduced 
to  eighty-five  per  cent  of  its  normal  amount,  the  company  shall 
without  any  authorization  or  requirement  immediately  adopt  the 
next  higher  grade  of  fare.    The  company  shall  also  without  any 
authorization    or   requirement   of   the    commission   immediately 
adopt  the  next  succeeding  higher  grade  of  fare  as  shown  on  its 
rate  schedule  if  and  whenever  its  reserve  fund  shall  be  reduced  to 
fifty  per  cent  of  its  original  or  normal  amount,  and  if  at  the  end 
of  three  months  after  such  increase  said  reserve  fund  is  less  than 
seventy  per  cent  of  its  original  or  normal  amount  the  company 
shall  again  increase  its  fares  from  the  grade  then  in  force  to  the 
next  higher  grade  in  the  said  rate  schedule,  and  shall  continue  to 


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80 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


increase  its  fares  by  steps  from  the  grade  then  in  force  to  the 
next  higher  grade  in  the  said  schedule  at  intervals  of  not  less  than 
three  months,  until  such  reserve  fund  equals  ninety  per  cent  of 
its  original  or  normal  amount. 

Section  18.  The  properties  of  the  company  shall  be  operated 
subject  to  the  supervision  of  the  commission,  which  may  require 
such  changes  in  service,  management,  operating  conditions  and 
otherwise  as  may  in  its  opinion  be  necessary  for  the  efficient  con- 
duct of  the  business  of  the  company  in  the  interest  of  the  public. 
When  any  difference  shall  arise  between  the  company  and  the 
commission  in  regard  to  carrying  out  the  provision  of  this  section, 
and  the  company  and  the  commission  are  unable  to  agree,  the 
matter  in  dispute  shall  be  determined  by  arbitration  by  three  dis- 
interested persons,  one  appointed  by  the  commission,  one  by  the 
company,  and  the  third  by  the  chief  justice  of  the  supreme 
judicial  court. 

Section  19.  The  company  shall  be  bound  to  sell  to  the  com- 
monwealth or  any  political  subdivision  thereof  at  any  time  its 
entire  property  at  its  then  existing  investment  value  as  de- 
termined under  the  provisions  of  this  act.  The  purchaser  shall 
assume  all  leases,  contracts,  etc.,  and  the  payment  of  all  valid 
obligations.  This  provision  shall  not  preclude  the  commonwealth 
from  acquiring  any  street  railway  at  a  less  price  by  purchase  or 
otherwise  under  the  provisions  of  existing  or  future  laws. 

Section  20.  The  company  may  issue  its  stock,  bonds  and 
other  obligations  with  the  approval  of  the  commission  in  the 
manner  now  provided  by  law,  and  sell  the  same  at  prices  to  be 
approved  by  the  commission,  which  prices  may  be  below  their 
par  value,  and  may  hereafter  from  time  to  time  with  the  approval 
of  the  commission  as  aforesaid  issue  bonds  to  an  amount  which 
when  added  to  the  amount  of  its  indebtedness  then  outstanding 
shall  not  cause  the  aggregate  amount  of  its  bonded  indebtedness 
to  exceed  by  more  than  fifty  per  cent  the  amount  of  its  capital 
stock  actually  paid  in  at  the  time  plus  premiums  and  deducting 
discounts  on  stock  sold. 

Section  21.  The  governor,  with  the  consent  of  the  council, 
shall  appoint  for  a  term  of  three  years  a  director  to  the  board  of 
directors  of  the  company,  to  be  known  as  the  state  director,  who 
shall  be  a  resident  of  a  city  or  town  served  by  such  company, 
but  shall  not  be  an  owner  of  its  stock  or  bonds.  The  by-laws  of 
the  company  shall  provide  for  monthly  meetings  of  the  board  of 
directors. 


1918.1 


SENATE  —  No.  265. 


81 


Section  22.  The  commonwealth  shall  be  divided  into  ten 
street  railway  districts,  and  for  each  district  the  commission  shall 
appoint  a  resident  deputy  commission  for  a  term  of  three  years, 
his  salary  and  expense  allowance  to  be  fixed  by  the  commission 
and  paid  by  the  commonwealth.  It  shall  be  his  duty  to  keep  in 
constant  touch  with  the  operation  of  the  company  and  with  the 
communities  served  thereby,  and  to  inform  the  commission  of  all 
complaints  and  criticisms  of  the  service  rendered  in  order  that 
the  commission  may  at  all  times  be  in  a  position  to  take  such 
action,  if  any,  as  may  be  required  in  the  public  interest. 

Section  23.  The  commission  shall  employ  two  examiners  ex- 
perienced in  the  street  railway  business,  their  salaries  and  expense 
allowance  to  be  fixed  by  the  commission  and  paid  by  the  com- 
panies. It  shall  be  the  duty  of  the  examiners  to  supply  the  com- 
mission with  information  as  to  the  condition  and  operating 
efficiency  of  the  company  and  to  suggest  such  changes  therein  as 
may  seem  to  them  necessary  and  advisable. 

Section  24.  This  act  may  be  accepted  by  a  company  by  vote 
of  not  less  than  a  majority  of  all  its  stock  outstanding  and  en- 
titled to  vote,  at  a  special  meeting  of  its  stockholders  duly  called 
for  the  purpose.  A  copy  of  such  vote  shall  be  filed  with  the  secre.- 
tarv  of  the  commonwealth  and  with  the  commission.  No  pro- 
vision  of  any  general  or  special  law  establishing  a  fixed  rate  of 
fare  shall  be  thereafter  applicable  to  any  such  company. 

Section  25.  Whenever  after  the  date  of  the  passage  of  this 
act  any  bonds  or  other  obligations  have  been  issued  by  a  com- 
pany which  has  accepted  the  same,  the  provisions  of  the  act  shall 
not  be  changed  so  as  to  diminish  the  interest  return  on  the  in- 
vestment value  of  its  property  as  provided  herein  so  long  as  any 
of  such  bonds  or  other  obligations  remain  outstanding. 

8b. 

An  Act  to  provide  Street  Railway  Service  at  Cost. 
Be  it  enacted,  etc.,  as  JoUows: 

Section  1.  Any  street  railway  company  which  accepts  this 
act  as  provided  in  section  thirteen  shall  thereafter  furnish 
service  to  the  public  at  cost,  and  shall  thereafter  be  subject  to 
the  provisions  of  this  act  with  reference  to  the  matters  specified 
herein,  but  in  all  other  respects  shall  be  subject  to  the  general 
laws  relating  to  street  railway  companies. 

Section  2.  The  cost  of  the  service  shall  include  operating  ex- 
penses, taxes,  rentals,  interest  on  all  indebtedness  not  included  in 


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82 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


invested  capital,  such  allowances  for  depreciation,  obsolescence 
and  losses  in  respect  of  sold,  destroyed  or  abandoned  property  as 
may  be  fixed  in  the  case  of  each  company  by  the  public  service 
commission,  and  all  other  expenditures  and  charges  which  under 
the  classification  of  accounts  of  the  interstate  commerce  commis- 
sion and  under  the  laws  of  the  commonwealth  are  properly 
chargeable  against  income  or  surplus.  The  cost  of  the  service 
shall  also  include  interest  at  the  rate  of  six  per  cent  per  annum 
on  the  capital  invested:  provided,  however,  that  if  the  public 
service  commission  is  of  opinion  at  any  time  that  a  higher  return 
upon  the  capital  invested  is  necessary  in  order  to  enable  the  com- 
pany to  secure  additional  capital  it  may  upon  the  application  of 
the  company  fix  such  rate  of  return  and  also  the  length  of  time 
for  which  it  shall  be  in  force. 

Section  3.  The  words  "invested  capital"  or  "capital  actually 
invested"  as  used  in  this  act  shall  mean  the  aggregate  of  the  fol- 
lowing items:  — 

(a)  Cash  actually  paid  into  the  company  for  stock  and  bonds 
issued  for  capital  purposes  with  the  approval  of  the  public 
service  commission  or  its  predecessor,  the  railroad  commission. 

(6)  The  face  or  par  value  of  stock  or  bonds  issued  for  capital 
purposes  or  paid  for  in  property  where  the  public  service  commis- 
sion or  its  predecessor,  the  railroad  commission,  after  the  issue  of 
such  stock  or  bonds,  determined  that  the  then  value  of  the  prop- 
erty of  the  company  was  equal  to  the  face  value  of  its  capital 
stock  and  its  indebtedness. 

(c)  In  all  cases  other  than  those  provided  for  in  subsections 
(a)  and  (6),  the  actual  cash  paid  in  or  actual  cash  value  of  prop- 
erty paid  in  for  stock  or  bonds  issued  for  capital  purposes  where 
such  issue  was  not  approved  by  the  public  service  commission,  or 
its  predecessor,  the  railroad  commission,  the  amount  of  such  cash 
so  paid  in  or  the  cash  value  of  the  property  so  paid  in  to  be  de- 
termined by  the  public  service  commission  upon  the  application 
of  the  company:  provided,  however,  that  if  the  amount  of  cash  so 
paid  in  or  the  cash  value  of  the  property  so  paid  in  shall  have 
heretofore  been  determined  in  any  other  proceeding  by  the  public 
service  commission  or  its  predecessor,  no  further  determination 
shall  be  necessary. 

(d)  Stock  or  bonds  issued  to  provide  the  reserve  fund  herein- 
after mentioned  shall  be  deemed  to  have  been  issued  for  capital 
purposes. 

In  the  case  of  consolidation  of  two  or  more  companies  or  the 


1918.] 


SENATE  —  No.  265. 


83 


purchase  of  all  the  property  and  franchises  of  one  company  by 
another,  the  invested  capital  of  the  consolidated  company  shall 
be  deemed  to  be  the  aggregate  amount  of  the  invested  capital  of 
the  companies  consolidated,  and  in  the  case  of  purchase  the  bonds 
and  stocks  issued  or  assumed  in  payment  for  the  properties  and 
franchises  purchased  shall  be  taken  at  an  amount  equal  to  the 
invested  capital  of  the  selling  company  as  herein  defined. 

Section  4.  No  company  shall  accept  this  act  until  it  has  pro- 
vided a  reserve  fund  of  not  less  than  four  per  cent  nor  more  than 
eight  per  cent  of  the  par  value  of  its  outstanding  capital  stock, 
but  in  no  event  to  exceed  one  million  dollars.  Such  reserve  fund 
may  be  provided  by  the  issue  of  either  stock  or  bonds,  and  the 
company  may,  with  the  consent  of  not  less  than  two  thirds  of  its 
stockholders  present  and  voting  at  any  meeting,  issue  preferred 
stock  for  the  purpose,  carrying  such  rate  of  dividend  and  having 
such  rights  and  preferences  as  the  stockholders  may  deem  neces- 
sary and  as  may  be  approved  by  the  public  service  commission. 

The  reserve  fund  shall  at  all  times  be  kept  separate  and  dis- 
tinct, and  shall  be  used  only  for  the  purpose  of  making  up  a 
deficiency  of  income  where  the  income  of  the  company  is  insuffi- 
cient to  pay  the  cost  of  the  service.  Until  it  is  so  used,  it  may 
be  invested  in  government  bonds  or  such  other  securities  as  may 
be  approved  by  the  public  service  commission. 

Section  5.  Whenever  the  income  of  the  company  is  insuffi- 
cient to  meet  the  cost  of  the  service  as  defined  in  section  two, 
there  shall  be  transferred  from  the  reserve  fund  an  amount 
sufficient  to  make  up  such  deficiency,  and  if,  on  the  other  hand, 
such  income  is  more  than  sufficient  to  meet  the  cost  of  the 
service,  the  excess  shall  be  transferred  to  and  added  to  the 
amount  of  the  reserve  fund. 

The  company  shall,  on  or  before  the  twenty-fifth  day  of  each 
month,  file  with  the  commission  a  statement  in  such  form  and  in 
such  detail  as  the  commission  may  require,  showing  its  income 
and  expenditures  during  the  preceding  month,  and  the  pro  rata 
amount  set  aside  on  account  of  taxes,  depreciation,  interest  on  in- 
vested capital  and  any  other  periodical  charges.  The  commission 
may  object  to  any  expenditure  or  charge  as  unreasonable,  un- 
lawful or  improper  made  or  to  be  made  by  the  company  in  con- 
nection with  the  maintenance  and  operation  of  its  property.  If 
the  objection  by  the  commission  refers  to  an  expenditure  already 
made,  the  company  forthwith  upon  receipt  of  notice  shall  remove 
the  amount  from  the  account  or  accounts  to  which  it  had  been 


II 


^ 


84 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


charged,  and  hold  the  same  in  a  suspense  account  until  the 
amount  in  dispute  is  adjudicated.  If  the  objection  refers  to  an 
expenditure  to  be  made,  the  company,  if  it  makes  such  expendi- 
ture, shall  charge  to  and  carry  the  same  in  a  suspense  account 
until  the  item  in  dispute  is  adjudicated.  In  case  the  commission 
and  the  company  are  unable  within  ten  days,  Saturdays,  Sundays 
and  legal  holidays  excepted,  after  the  delivery  of  such  notice,  to 
agree  upon  the  reasonableness  and  propriety  of  such  expenditure 
or  charge,  the  same  shall  be  determined  by  arbitration  as  pro- 
vided in  section  six  hereof. 

Any  contract,  agreement  or  undertaking  having  to  do  with  the 
maintenance  and  operation  of  the  company's  property  extending 
beyond  a  period  of  one  year,  or  involving  an  expenditure  of  over 
five  per  cent  of  the  reserve  fund  (or  any  agreement,  contract,  or 
undertaking  having  to.  do  with  the  maintenance  and  operation  of 
the  company's  property  which  the  company  shall  desire  to  make, 
subject  to  the  approval  of  the  commission),  shall  be  entered  into 
by  the  company  subject  to  the  approval  of  the  commission.  Any 
payments  made  under  any  such  contract  approved  by  the  com- 
mission shall  not  be  subject  to  objection  hereunder  unless  the 
payments  thereunder  shall  not  be  in  accordance  with  the  terms  of 
such  contract. 

Upon  submission  of  any  such  agreement,  contract  or  undertak- 
ing to  the  commission,  they  shall  either  approve  or  disapprove 
the  same  within  thirty  days  thereafter. 

Section  6.  If  the  company  or  the  commission  are  unable  to 
agree  as  to  any  expenditure  or  charge  as  provided  in  the  preced- 
ing section,  either  the  commission  or  the  company  may  within 
ten  days  thereafter  notify  the  other  of  its  desire  to  submit  the 
dispute  to  arbitration,  and  in  such  notification  shall  name  one 
arbitrator.  Within  ten  days  after  the  receipt  of  such  notice  the 
other  party  shall  name  a  second  arbitrator,  and  the  two  arbitra- 
tors so  chosen  shall  thereupon  within  ten  days,  if  possible,  agree 
upon  a  third  arbitrator,  but  if  they  are  unable  so  to  agree,  the 
third  arbitrator  shall  be  appointed  on  the  application  of  either 
party  either  by  the  governor  of  the  commonwealth  or  by  the 
chief  justice  of  the  superior  court. 

If  it  is  agreed  by  the  commission  and  the  company  or  deter- 
mined by  arbitration  that  the  Expenditure  or  charge  so  objected 
to,  or  any  part  thereof,  is  reasonable  and  proper,  the  amount  so 
agreed  upon  or  determined  shall  be  charged  to  the  cost  of  the 
service.    In  so  far  as  all  or  any  part  of  such  expenditure  or  charge 


1918.] 


SENATE  —  No.  265. 


85 


may  be  disallowed  as  unreasonable  or  improper,  the  amount  so 
disallowed  shall  be  borne  by  the  company. 

It  shall  be  the  duty  of  the  commission  in  case  of  objection  to 
any  expenditure  or  charge  to  give  notice  thereof  to  the  company 
within  thirty  days  after  the  commission  has  become  cognizant  of 
such  expenditure  or  charge;  but  any  failure  on  the  part  of  the 
commission  to  give  such  notice  within  thirty  days  shall  not  ex- 
cuse the  company  from  complying  with  the  provisions  hereof  in 
respect  to  the  money  to  be  held  in  suspense,  but  such  delay  may 
be  set  up  by  the  company  as  a  defense  to  the  disallowance 
thereof. 

Section  7.  When  any  company  accepts  this  act,  it  shall  file 
with  such  acceptance  a  schedule  of  eight  different  grades  of  fares 
of  which  four  shall  be  below  its  existing  rate  of  fare  and  four 
above,  and  the  public  service  commission  shall,  within  sixty  days 
thereafter,  either  approve  the  schedule  so  filed,  or  establish  eight 
other  grades  of  fare  in  place  thereof,  and  the  commission  shall  at 
the  same  time  designate  which  of  the  rates  of  fare  so  established 
shall  thereafter  be  in  force  as  being  in  the  opinion  of  the  com- 
mission that  rate  of  fare  which  will  enable  the  company  to  earn 
an  income  sufficient  to  meet  the  cost  of  the  service.  Whenever 
by  reason  of  any  change  in  the  existing  rate  of  fare  there  are  less 
than  four  grades  either  above  or  below  any  new  rate  of  fare  es- 
tablished, the  company  shall  forthwith  file  with  the  commission  a 
schedule  of  such  additional  grades  of  fare  as  may  be  necessary,  so 
that  there  shall  always  be  not  less  than  four  above  and  four  be- 
low the  existing  rate  of  fare,  and  the  commission  shall  thereupon, 
within  sixty  days  thereafter,  either  approve  the  schedule  so  filed 
or  itself  establish  in  lieu  thereof  the  necessary  additional-  grades  of 
fare. 

In  fixing  the  different  grades  of  fare  the  differences  between  the 
same  shall  be  such  as  to  effect  either  an  increase  or  decrease  in 
the  annual  revenue  of  the  company,  in  the  opinion  of  the  public 
service  commission,  of  not  less  than  thirty  per  cent  of  the  reserve 
fund. 

If  at  any  time  it  shall  appear  in  the  interest  of  the  public  or  of 
the  company  that  the  said  schedule  should  be  changed  either 
with  regard  to  the  method  or  basis  upon  which  the  fares  and 
transfer  privileges  are  established,  or  because  the  steps  between 
the  different  grades  are  too  small  or  too  great,  or  for  any  other 
reason,  the  company  and  the  commission  may  by  agreement 
change  the  said  schedule. 


...    ^A^  iJf-. 


■  o£.ta,-°\.'|%^k-,  ■«     |Mji*-     gdT '^■'^ittn— ''^ ' 


86 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


The  different  grades  of  fare  may  include  not  only  variations  in 
the  cash  fare,  but  also  provisions  for  sale  of  tickets  at  reduced 
rates,  charging  for  or  elimination  of  transfers,  the  establishment 
in  whole  or  in  part  of  the  zone  system,  so  called,  or  the  variation 
of  fare  limits. 

Section  8.  If,  as  of  June  thirtieth  or  December  thirty-first  in 
any  year,  the  amount  of  the  reserve  fund  shall  exceed  by  thirty 
per  cent  the  amount  originally  established,  the  company  shall  on 
the  following  September  first  or  March  first  put  into  effect  the 
next  lower  grade  of  fare,  and  if,  as  of  such  June  thirtieth  or 
December  thirty-first,  the  reserve  fund  shall  be  less  than  seventy 
per  cent  of  the  amount  originally  established,  the  company  shall 
on  the  following  September  first  or  March  first  put  into  effect  the 
next  higher  grade  of  fare,  and  on  the  first  days  of  September  and 
March  in  each  year  the  grade  of  fare  shall  be  decreased  or  shall 
be  increased,  as  the  case  may  be,  if  the  amount  of  the  reserve 
fund  is  above  or  below  the  above  limits,  as  of  the  preceding  June 
thirtieth  or  December  thirty-first. 

Section  9.  Every  company  intending  to  accept  this  act  shall, 
prior  to  such  acceptance  and  as  a  condition  thereof,  provide  by 
the  issue  and  sale  of  additional  bonds  or  capital  stock  an  amount 
not  less  than  per  cent  of  the  par  value  of  its  then 

outstanding  stock,  which  amount  shall  be  used  from  time  to  time 
with  the  approval  of  the  public  service  commission  to  pay  for 
additions  and  improvements  to  its  property.  Subscriptions  to 
such  additional  bonds  or  stock  may  be  made  payable  in  such  in- 
stalments and  at  such  times  as  the  board  of  directors  of  the  com- 
pany may  determine. 

Section  10.  Any  company  accepting  this  act  shall  be  bound 
by  the  fact  of  such  acceptance  to  sell  its  entire  property  and 
franchises  as  a  going  concern  to  the  commonwealth  or  to  any 
political  subdivision  thereof  at  any  time  for  an  amount  in  cash 
equal  to  the  capital  invested  as  defined  in  section  three  hereof, 
and  the  purchaser  shall  in  addition  assume  all  the  outstanding 
contracts,  leases  and  other  liabilities  of  the  company  other  than 
stock  and  bonds  issued  for  capital  purposes. 

Section  11.  The  governor  with  the  consent  of  the  council 
shall  appoint  for  a  term  of  three  years  one  of  the  directors  of  the 
board  of  directors  of  any  company  accepting  this  act,  to  be 
known  as  the  state  director.  He  shall  be  a  resident  of  a  city  or 
town  served  by  such  company,  but  shall  not  be  an  owner  of  its 
stock  or  bonds.    The  by-laws  of  the  company  shall  be  modified 


1918.] 


SENATE  —  No.  265. 


87 


so  as  to  permit  of  the  appointment  of  such  director,  and  shall  also 
provide  for  monthly  meetings  of  the  board. 

Section  12.  Upon  the  acceptance  of  this  act  by  any  com- 
pany, the  governor  may,  upon  the  application  of  the  public 
service  commission,  appoint  a  deputy  commissioner  for  a  term  of 
three  years,  whose  duty  it  shall  be  to  keep  in  constant  touch 
with  the  operation  of  the  company^s  properties  and  the  character 
and  extent  of  the  service.  Such  deputy  commissioner  shall  be  in 
all  respects  subject  to  the  control  and  direction  of  the  public 
service  commission,  and  shall  keep  them  fully  informed  as  to  all 
matters  which  require  any  action  by  the  commission.  The  salary 
of  the  deputy  commissioner  and  his  expenses  as  allowed  by  the 
commission  shall  be  paid  by  the  company,  or,  if  his  duties  extend 
to  more  than  one  company,  they  shall  be  apportioned  between 
the  several  companies  in  respect  to  which  he  acts  in  such  manner 
as  the  commission  may  determine. 

Section  13.  Any  company  desiring  to  accept  the  provisions  of 
this  act  may  apply  to  the  public  service  commission  to  determine 
the  amount  of  its  invested  capital,  and  upon  such  determination 
such  company  may  accept  this  act  by  filing  with  the  public 
service  commission  its  election  so  to  do  authorized  by  a  vote  of 
not  less  than  the  holdings  of  a  majority  of  its  capital  stock  and 
(a)  evidence  satisfactory  to  the  compiission  that  it  has  or  will 
provide  the  reserve  fund  mentioned  in  section  four  hereof;  and 
(6)  evidence  satisfactory  to  the  commission  that  it  has  or  will 
provide  the  additional  money  by  the  issue  of  additional  bonds 
or  stock  referred  to  in  section  nine  hereof.  Upon  the  filing 
of  such  acceptance  it  shall  be  the  duty  of  the  commission  to  de- 
termine from  time  to  time  the  amount  which  the  company  shall 
set  aside  or  expend  for  depreciation,  obsolescence  or  for  taking 
care  of  losses  occasioned  by  sold,  destroyed  or  abandoned  prop- 
erty. 

Section  14.  Whenever  any  company  has  accepted  this  act 
and  has  issued  stock  or  bonds  since  such  acceptance  or  as  a  con- 
dition of  such  acceptance,  the  provisions  of  this  act  shall  not  be 
changed  so  as  to  diminish  the  interest  return  on  the  invested 
capital  so  long  as  any  of  such  bonds  or  stock  remain  outstanding. 


I 


HP"^ 


88 


REPORT  ON  STREET  RAILWAYS. 


8c. 


[Feb. 


An  Act  relative  to  the  Rates,  Charges  and  Service  of 
Street  Railway  Companies  and  their  Supervision  by 
THE  Public  Service  Commission. 

Be  it  enacted f  etc.,  as  follows: 

Section  1.  With  the  approval  of  the  public  service  commis- 
sion, and  upon  such  terms  and  conditions  as  said  commission, 
after  notice  and  a  public  hearing,  shall  determine  to  be  just  and 
reasonable  and  consistent  with  the  public  interest,  a  street  rail- 
way company  may  establish  a  sliding  scale  of  rates  and  charges 
for  the  transportation  of  passengers  upon  its  railway,  subject  to 
automatic  adjustment  in  relation  to  the  income  balance  of  said 
company  in  any  given  period  after  paying  all  operating  expenses 
and  other  charges  against  income,  including  such  provision  for  de- 
preciation and  reserve  funds  as  the  commission  shall  specify.  So 
far  as  consistent  with  the  automatic  adjustment  of  rates  and 
charges  provided  for  therein,  any  such  sliding  scale  shall  be 
subject  to  the  provisions  of  section  twenty  of  chapter  seven  hun- 
dred and  eighty-four  of  the  acts  of  the  year  nineteen  hundred  and 
thirteen,  and  of  section  twenty-one  of  said  chapter,  as  amended 
by  chapter  twenty-four  of  the  acts  of  the  year  nineteen  hundred 
and  sixteen. 

Section  2.  In  its  action  relative  to  any  sliding  scale  of  rates 
and  charges  which  a  street  railway  company  may  seek  to  estab- 
lish under  the  provisions  of  section  one,  the  public  service  com- 
mission shall  be  guided  by  the  desirability  of  insuring  such  a  re- 
turn upon  capital  invested  honestly  and  prudently  and  conserved 
with  reasonable  care  and  diligence  as  will  encourage  the  invest- 
ment of  additional  capital  in  needed  extensions  and  improve- 
ments to  street  railway  properties  in  this  commonwealth.  Among 
other  terms  and  conditions,  the  commission  may  require  the  com- 
pany to  provide,  either  by  the  issue  of  stock  or  bonds  or  other- 
wise, a  special  reserve  fund  which  may  be  drawn  upon  for  the 
payment  of  dividends  under  such  circumstances  and  subject  to 
such  regulations  as  the  commission  shall  specify.  Before  ap- 
proving any  such  sliding  scale  of  rates  and  charges,  the  public 
service  commission  may  further,  to  the  extent  that  it  deems  the 
public  interest  demands,  determine  upon  a  program  for  the 
gradual  rehabilitation,  improvement  or  extension  of  the  property 
of  the  company  and  reasonably  assure  itself  that  such  program 
will  be  undertaken  and  carried  into  effect. 


1918.] 


SENATE  -  No.  265. 


89 


Section  3.  The  public  service  commission  shall  establish  a 
special  department,  to  be  known  as  the  street  railway  depart- 
ment, whose  duty  it  shall  be  to  furnish  the  commission  with  in- 
formation relative  to  the  physical  condition,  service,  manage- 
ment and  operating  efficiency  of  the  street  railway  companies 
under  its  supervision.  If,  at  any  time,  the  commission  receives 
evidence  from  this  department  that  laxity,  carelessness,  ineffi- 
ciency or  wastefulness  in  the  conduct  of  the  affairs  of  a  company 
which  has  been  permitted  to  establish  a  sliding  scale  of  rates  and 
charges  under  the  provisions  of  this  act  is  seriously  affecting  its 
income  balance,  the  commission  shall  at  once  inform  the  company 
of  such  evidence  and  of  the  date  of  a  public  hearing  at  which 
both  the  department  and  the  company  shall  be  heard.  After 
such  hearing,  if  the  commission  finds  that  changes  in  the  conduct 
of  the  affairs  of  the  company  are  desirable  in  the  public  interest, 
it  shall  notify  the  company  in  writing  of  such  changes  and  of  the 
time  within  which  they  should  reasonably  be  made.  If,  at  the 
expiration  of  such  time,  the  commission  has  not  received  evidence 
that  the  changes  thus  specified  have  been  made,  it  shall  have 
power  forthwith  to  annul,  supersede  or  modify  the  sliding  scale 
of  rates  and  charges  of  said  company  to  the  extent  which  the 
commission  deems  necessary  for  the  protection  of  the  public 
interest.  Except  as  thus  provided,  the  public  service  commission 
shall  have  power  to  annul,  supersede  or  modify  a  sliding  scale  of 
rates  and  charges  established  under  the  provisions  of  this  act 
only  after  a  public  hearing  and,  unless  the  company  consents, 
only  during  a  period  of  sixty  days  after  the  expiration  of  each 
successive  period  of  five  years  subsequent  to  such  establishment. 

Section  4.  In  addition  to  the  purposes  for  which  a  street 
railway  company  may  increase  its  capital  stock  or  issue  bonds,  as 
provided  in  section  one  hundred  and  three  of  Part  III  of  chapter 
four  hundred  and  sixty-three  of  the  acts  of  the  year  nineteen 
hundred  and  six,  a  street  railway  company  may,  with  the  ap- 
proval of  the  public  service  commission,  and  subject  (except  as 
herein  otherwise  provided)  to  the  provisions  of  all  general  laws 
relative  to  such  increase  or  issue  now  or  hereafter  in  force,  in- 
crease its  capital  stock  or  issue  bonds,  secured  by  mortgage  or 
otherwise,  for  the  purpose  of  providing  any  special  reserve  fund 
for  the  payment  of  dividends  which  the  commission  may  require 
under  the  provisions  of  this  act,  and  that  portion  of  section  one 
hundred  and  eight  of  Part  III  of  chapter  four  hundred  and  sixty- 
three  of  the  acts  of  the  year  nineteen  hundred  and  six  which 
limits  the  amount  of  bonds,  coupon  notes  or  other  evidences  of 


I 

f 


90 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


11 

I 


indebtedness  payable  at  periods  of  more  than  twelve  months 
after  the  date  thereof  which  a  street  railway  company  may  issue 
shall  not  apply  to  bonds  issued  for  such  purpose. 

Section  5.  In  addition  to  the  amount  appropriated  by  the 
general  court,  the  public  service  commission  may  annually  ex- 
pend, in  the  performance  of  its  duties  under  this  act,  an  amount 
not  exceeding  two  per  cent  of  the  amount  expended  and  charged 
to  operating  expense  in  the  last  preceding  calendar  year  for 
superintendence  and  salaries  and  expenses  of  general  officers  and 
general  office  clerks  by  the  street  railway  companies  under  its 
supervision.  Within  thirty  days  after  this  act  takes  effect,  and 
on  or  before  the  first  day  of  April  in  each  succeeding  year,  the 
public  service  commission  shall  submit  to  the  tax  commissioner 
a  statement  of  the  amount  required  for  this  purpose,  and  within 
ninety  days  thereafter  the  tax  commissioner  shall  assess  upon 
each  of  said  street  railway  companies  its  share  of-  such  amount  in 
proportion  to  its  operating  revenue  for  the  last  preceding  year; 
and  such  assessment  shall  be  collected  in  the  same  manner  as 
taxes  upon  corporations.  Of  the  amount  so  assessed  and  col- 
lected, any  balance  remaining  on  the  thirtieth  day  of  November 
in  any  year  shall  be  carried  forward  to  the  next  year,  and  shall 
be  taken  into  account  by  the  public  service  commission  in  de- 
termining the  total  amount  required  for  that  year. 

Section  6.     This  act  shall  take  effect  upon  its  passage. 

8d. 

An  Act  to  provide  Street  Railway  Service  at  Cost. 
Be  it  enacted f  etc.,  as  follows: 

Section  1.  Any  street  railway  company  whose  rates  and 
charges  are  now  or  shall  hereafter  be  regulated  and  prescribed  by 
the  public  service  commission  under  general  law  may  accept  the 
provisions  of  this  act  in  the  manner  hereinafter  provided.  Any 
such  company  which  shall  so  accept  the  provisions  of  this  act 
shall  thereafter  furnish  service  to  the  public  at  cost,  and  shall 
thereafter  be  subject  to  the  provisions  of  this  act  with  reference 
to  the  matters  specified  herein,  but  in  all  other  respects  shall  be 
subject  to  the  general  laws  relating  to  street  railway  companies, 
including  those  relative  to  the  character  and  extent  of  the  service 
to  be  rendered. 

Section  2.  The  words  "invested  capital"  as  used  herein  shall 
mean  the  amount  of  cash  or  property  paid  in  for  capital  stock 
and  bonds  from  time  to  time  outstanding  which  have  been  issued 


1918.] 


SENATE  —  No.  265. 


91 


for  capital  purposes,  and  the  term  "bonds"  shall  include  bonds 
assumed  by  any  company,  as  well  as  those  issued  by  it.  The 
words  "stock  investment"  as  used  herein  shall  mean  the  amount 
of  invested  capital  less  the  face  or  par  value  of  bonds  from  time 
to  time  outstanding.  The  words  "the  company"  as  used  herein 
shall  mean  any  street  railway  company  which  has  accepted  the 
provisions  of  this  act  as  herein  provided.  The  words  "the  com- 
mission" shall  mean  the  public  service  commission  or  its  prede- 
cessor, the  board  of  railroad  commissioners. 

Section  3.  The  cost  of  the  service  shall  include  operating  ex- 
penses, taxes,  rentals,  interest  on  indebtedness  as  hereinafter  de- 
fined, and  such  allowances  for  depreciation  and  for  operating  re- 
serve funds  as  may  be  fixed  in  the  case  of  each  company  by  the 
commission,  and  all  expenditures  and  charges  which  under  the 
classification  of  accounts  of  the  interstate  commerce  commission 
and  under  the  laws  of  the  commonwealth  are  properly  chargeable 
against  income  or  surplus.  The  cost  of  the  service  shall  also  in- 
clude a  return  upon  the  stock  investment  at  such  rate,  not  less 
than  six  per  cent  nor  more  than  eight  per  cent,  as  the  public 
service  commission  may,  in  view  of  the  history,  circumstances 
and  conditions  of  the  company,  deem  just  and  reasonable  and 
necessary  to  encourage  the  investment  of  additional  capital  in 
needed  extensions  and  improvements  of  its  property.  The  rate  of 
return  determined  by  the  commission  from  time  to  time,  within 
the  limits  above  prescribed,  may  be  modified  by  the  commission 
after  a  public  hearing  upon  the  application  of  the  company  or 
any  interested  party  or  upon  the  motion  of  the  commission. 

Section  4.  The  amount  of  the  invested  capital  shall  be  the 
aggregate  of  the  items  specified  in  paragraphs  (a)  (b)  and  (c)  less 
any  amount  which  may  be  deducted  under  the  provisions  of 
paragraph  (d)  of  this  section. 

(a)  Cash  actually  paid  in  to  the  company  for  stock  and  bonds 
issued  for  capital  purposes  where  the  public  service  commission  or 
its  predecessor,  the  board  of  railroad  commissioners,  has  deter- 
mined that  the  amount  properly  expended  or  required  for  the 
purposes  set  out  in  the  company's  petition  is  equal  to  the  amount 
of  cash  so  paid,  and  has  approved  the  issue  of  such  stock  or 
bonds. 

(6)  The  face  or  par  value  of  stock  and  bonds  issued  for  prop- 
erty when  the  commission  has,  subsequent  to  the  issue  of  such 
stock  or  bonds,  determined  that  the  then  value  of  the  company's 
property  equalled  or  exceeded  the  face  value  of  its  capital  stock 
and  indebtedness. 


^1 


ii 


92 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


(c)  In  cases  other  than  those  specified  in  paragraphs  (a)  and 
(h)  the  amount  of  cash  or  fair  value  of  the  property  paid  in  for 
stock  and  bonds  and  honestly  and  prudently  expended  or  ac- 
quired for  capital  purposes,  the  amount  of  cash  or  fair  value  of 
the  property  to  be  determined  by  the  commission  upon  the  ap- 
plication of  the  company:  provided^  however,  that  if  the  amount 
of  cash  or  the  fair  value  of  the  property  so  paid  in  has  heretofore 
been  determined  by  the  commission  no  further  determination 
shall  be  necessary. 

(d)  From  the  aggregate  of  items  (a)  (6)  and  (c)  shall  be  de- 
ducted the  amount  of  the  actual  cost  or  cash  value  of  the  prop- 
erty sold,  leased  or  abandoned  or  not  used  or  useful  for  street 
railway  purposes,  and  the  amount  by  which  the  original  invest- 
ment has  been  reduced  or  impaired  through  the  failure  of  the 
company  to  conserve  the  same  with  reasonable  care  and  diligence 
prior  to  the  acceptance  of  this  act,  such  amounts  to  be  deter- 
mined by  the  commission:  provided,  however,  that  in  lieu  of  the 
deduction  of  such  amounts  or  any  part  thereof  the  commission 
may  by  agreement  with  the  company  fix  a  lower  rate  of  return 
on  the  stock  investment  than  the  minimum  prescribed  in  section 
three,  until  the  loss  or  impairment  of  capital  is  made  good  out  of 
the  net  earnings  of  the  company. 

In  case  a  company  has  reduced  its  capital  stock  or  debt  the  in- 
vested capital  shall  not  exceed  the  outstanding  stock  and  debt  of 
such  company.  In  the  case  of  consolidation  of  two  or  more  com- 
panies, or  the  purchase  of  all  the  property  and  franchises  of  one 
company  by  another,  the  invested  capital  of  the  consolidated 
company  at  the  date  of  such  consolidation  shall  be  deemed  to  be 
the  aggregate  amount  of  the  invested  capital  of  the  companies 
consolidated,  and  in  the  case  of  purchase  of  bonds  and  stocks 
issued  or  assumed  in  payment  for  the  properties  and  franchises 
purchased,  shall  be  taken  at  an  amount  equal  to  the  invested 
capital  of  the  selling  company  as  herein  defined.  Stock  or  bonds 
issued  to  provide  the  reserve  fund  hereinafter  mentioned  shall  be 
deemed  to  have  been  issued  for  capital  purposes. 

Section  5.  Any  company  desiring  to  accept,  or  which  has  ac- 
cepted, this  act,  as  provided  in  section  fifteen,  shall  at  the  time 
of  its  application  to  the  commission  to  determine  the  amount  of 
its  then  invested  capital,  or  within  six  months  after  the  date  of 
its  acceptance  of  this  act,  apply  to  the  commission  to  determine 
the  status  of  its  then  unfunded  debt.  The  commission  shall 
thereupon  determine  the  amount  thereof  which  represents  ex- 
penditures properly  incurred  for  capital  purposes  and  the  amount 


1918.] 


SENATE  —  No.  265. 


93 


thereof  which  represents  deficits  of  operation  which  are  not  due 
to  the  payment  of  yearly  returns  upon  the  stock  investment  in 
excess  of  an  average  rate  of  six  per  cent,  or  otherwise  attributable 
to  mismanagement.    The  commission  shall  have  broad  discretion 
to  determine  the  last-named  amount  from  such  evidence  as  is 
available,  and  with  due  regard  to  existing  equities  as  between  in- 
vestors in  and  patrons  of  the  company.     The  commission  may 
also  make  provision  for  the  gradual  retirement  of  this  amount  by 
charges  to  operating  expense  to  be  included  as  a  part  of  the  cost 
of  the  service  whenever,  in  the  judgment  of  the  commission,  this 
may  be  done  without  increasing  the  rates  of  fare  then  in  effect. 
Interest  charges  on  both  of  said  amounts,  in  addition  to  interest 
charges  upon  the  company's  bonded  indebtedness,  shall  be  in- 
cluded  in   the  cost  of  the  service.     Interest  charges  upon  the 
residue  of  the  unfunded  debt,  not  included  in  either  of  the  said 
amounts,  shall  be  borne  by  the  company  and  charged  to  the 
amount  which  would  otherwise  be  available  as  a  return  upon  the 
stock  investment  in  accordance  with  the  provisions  of  section 
three.    In  case  any  company  fails  to  make  an  application  for  the 
determination  of  the  status  of  its  unfunded  debt,  as  provided  in 
this  section,  all  interest  charges  upon  its  unfunded  debt  outstand- 
ing at  the  date  of  the  acceptance  of  this  act  shall  be  borne  by 
the  company.     Where  the  interest  on  the  unfunded  debt  or  any 
portion   thereof   must,   under  the  provision   of   this  section,   be 
borne  by  the  company,  the  commission  may,  in  its  discretion, 
provide  for  the  gradual  retirement  of  such  unfunded  debt  or 
portion  thereof  by  charges  to  the  amount  which  would  otherwise 
be  available  as  a  return  upon  the  stock  investment,  in  so  far  as 
this  may,  in  the  opinion  of  the  commission,  be  feasible  without 
reducing  the  rate  of  return  upon  the  stock  investment  provided 
for  in  section  three.    Interest  charges  upon  the  unfunded  debt  in- 
curred by  the  company  after  its  acceptance  of  this  act  shall  be 
included  in  the  cost  of  the  service  until  such  time  as  the  commis- 
sion disallows  any  portion  of  such  debt  as  unreasonable  or  im- 
proper.   All  interest  charges  upon  the  portion  so  disallowed  shall 
thereafter  be  borne  by  the  company. 

Section  6.  No  company  shall  accept  this  act  until  it  has  pro- 
vided a  reserve  fund  of  not  less  than  four  per  cent  nor  more  than 
eight  per  cent  of  the  par  value  of  its  outstanding  capital  stock, 
but  in  no  event  to  exceed  one  million  dollars.  Such  reserve  fund 
may  be  provided  by  the  issue  of  either  stock  or  bonds,  and  the 
company  may,  with  the  consent  of  not  less  than  two  thirds  of  its 


M 
.1 


94 


REPORT  ON  STREET  RAILWAYS. 


[Feb. 


stockholders  present  and  voting  at  any  meeting  issue  preferred 
stock  for  the  purpose,  carrying  such  rate  of  dividend  and  having 
such  rights  and  preference  as  the  stockholders  may  deem  neces- 
sary and  as  may  be  approved  by  the  public  service  commission. 

Section  7.  Whenever  the  income  of  the  company  is  insuffi- 
cient to  meet  the  cost  of  the  service  as  defined  in  section  three, 
there  shall  be  transferred  from  the  reserve  fund  an  amount  suffi- 
cient to  make  up  such  deficiency,  and  if,  on  the  other  hand,  such 
mcorae  is  more  than  sufficient  to  meet  the  cost  of  the  service,  the 
excess  shall  be  transferred  to  and  added  to  the  amount  of  the 
reserve  fund. 

The  company  shall,  on  or  before  the  twenty-fifth  day  of  each 
month,  file  with  the  commission  a  statement  in  such  form  and  in 
such  detail  as  the  commission  may  require,  showing  all  contracts, 
agreements  or  undertakings  having  to  do  with  the  maintenance 
and  operation  of  the  company's  property  extending  beyond  a 
period  of  one  year  or  involving  an  expenditure  of  over  five  per 
cent  of  the  amount  of  the  reserve  fund  as  originally  established. 
Its  income  and  expenditures  during  the  preceding  month  and  the 
pro  rata  amount  set  aside  on  account  of  taxes,  depreciation, 
mterest  on  invested  capital  and  any  other  periodical  charges,  and 
any  amounts  added  to  or  withdrawn  from  the  reserve  fund. 

Section  8.     When  any  company  accepts  this  act  it  shall  file 
with  such  acceptance  a  schedule  of  eight  different  grades  of  fares 
of  which  four  shall  be  below  its  existing  rate  of  fare  and  four 
above,  and  the  public  service  commission  shall,  within  sixty  days 
thereafter,  either  approve  the  schedule  so  filed  or  establish  eight 
other  grades  of  fare  in  place  thereof,  and  the  commission  shall  at 
the  same  time  designate  which  of  the  rates  of  fare  so  estajblished 
shall  thereafter  be  in  force  as  being,  in  the  opinion  of  the  com- 
mission, that  rate  of  fare  which  will  enable  the  company  to  earn 
an  income  sufficient  to  meet  the  cost  of  the  service:    provided, 
however,  that  if,  during  any  period  of  sixty  days,  more  than  one 
company  shall  file  its  acceptance  of  this  act  and  a  schedule  of 
proposed  grades  of  fare,  the  commission  shall  not  be  required  to 
approve  or  establish  the  grades  of  fare  for  any  such  company 
until  thirty  days  after  the  commission  shall  have  passed  upon  all 
schedules  previously  filed  in  accordance  with  the  provisions  of 
this  section.    Whenever,  by  reason  of  any  change  in  the  existing 
rate  of  fare,  there  are  less  than  four  grades  either  above  or  below 
any  rate  of  fare  which  is  then  in  force,  the  company  shall  forth- 
with file  with  the  commission  a  schedule  of  such  additional  grades 
of  fare  as  may  be  necessary,  so  that  there  shall  always  be  not 


1918.] 


SENATE  —  No.  265. 


95 


less  than  four  above  and  four  below  the  existing  rate  of  fare,  and 
the  commission  shall  thereupon,  within  sixty  days  thereafter, 
either  approve  the  schedule  so  filed  or  itself  establish  in  lieu 
thereof  the  necessary  additional  grades  of  fare. 

In  fixing  the  different  grades  of  fare  the  differences  between  the 
same  shall  be  such  as  to  effect  either  an  increase  or  decrease  in 
the  annual  revenue  of  the  company,  in  the  opinion  of  the  public 
service  commission,  of  not  less  than  thirty  per  cent  of  the  reserve 
fund. 

If  at  any  time  it  shall  appear  in  the  interest  of  the  public  or  of 
the  company  that  the  said  schedule  should  be  changed  either 
with  regard  to  the  method  or  basis  upon  which  the  fares  and 
transfer  privileges  are  established,  or  because  the  steps  between 
the  different  grades  are  too  small  or  too  great,  or  for  any  other 
reason,  the  company  and  the  commission  may  by  agreement 
change  the  said  schedule. 

The  different  grades  of  fare  may  include  not  only  variations  in 
the  cash  fare,  but  also  provisions  for  sale  of  tickets  at  reduced 
rates,  charging  for  or  elimination  of  transfers,  the  establishment 
in  whole  or  in  part  of  the  zone  system,  so  called,  or  the  variation 
of  fare  limits. 

Except  as  thus  provided,  the  commission  shall  have  power  to 
annul,  supersede  or  modify  such  schedule  only  after  a  public 
hearing,  and  only  during  a  period  of  sixty  days  after  the  expira- 
tion of  each  successive  period  of  five  years  subsequent  to  the  ap- 
proval or  establishment  of  such  schedule:  provided,  however,  that 
no  modification  in  such  schedule  shall  be  made  which  in  the 
opinion  of  the  commission  may  diminish  the  rate  of  return  on  the 
stock  investment  provided  for  in  section  three. 

Section  9.  If,  as  of  June  thirtieth  or  December  thirty-first  in 
any  year,  the  amount  of  the  reserve  fund  shall  exceed  by  thirty 
per  cent  the  amount  originally  established,  the  company  shall  on 
the  following  September  first  or  March  first  put  into  effect  the 
next  lower  grade  of  fare,  and  if,  as  of  such  June  thirtieth  or 
December  thirty-first  the  reserve  fund  shall  be  less  than  seventy 
per  cent  of  the  amount  originally  established,  the  company  shall 
on  the  following  September  first  or  March  first  put  into  effect  the 
next  higher  grade  of  fare,  and  on  the  first  days  of  September  and 
March  in  each  year  the  grade  of  fare  shall  be  decreased  or  shall 
be  increased,  as  the  case  may  be,  if  the  amount  of  the  reserve 
fund  is  above  or  below  the  above  limits,  as  of  the  preceding  June 
thirtieth  or  December  thirty-first. 

Section  10.     Every   company   intending   to   accept   this   act 


96  REPORT  ON  STREET  RAILWAYS.  [Feb. 

shall,  prior  to  such  acceptance  and  as  a  condition  thereof,  provide 
by  the  issue  and  sale  of  additional  bonds  or  capital  stock  an 
amount  not  less  than  per  cent  of  the  par  value  of  its 

then  outstanding  stock,  which  amount  shall  be  used  from  time  to 
time  with  the  approval  of  the  public  service  commission  to  pay 
for  additions  and  improvements  to  its  property.  Subscriptions  to 
such  additional  bonds  or  stock  may  be  made  payable  in  such  in- 
stalments and  at  such  times  as  the  board  of  directors  of  the  com- 
pany may  determine  and  the  commission  shall  approve. 

Section  11.  Any  company  accepting  this  act  shall  be  bound 
by  the  fact  of  such  acceptance  to  sell  its  entire  property  and 
franchises  as  a  going  concern  to  the  commonwealth  or  to  any 
political  subdivision  thereof  at  any  time  for  an  amount  in  cash 
equal  to  the  capital  invested  as  defined  in  section  three  hereof, 
and  the  purchaser  shall  in  addition  assume  all  the  outstanding 
contracts,  leases  and  other  liabilities  of  the  company  other  than 
stock  and  bonds  issued  for  capital  purposes. 

Section  12.  The  governor  with  the  consent  of  the  council 
shall  appoint  for  a  term  of  three  years  one  of  the  directors  of  the 
board  of  directors  of  any  company  accepting  this  act,  to  be 
known  as  the  state  director.  He  shall  be  a  resident  of  a  city  or 
town  served  by  such  company,  but  shall  not  be  an  owner  of  its 
stock  or  bonds.  The  by-laws  of  the  company  shall  be  modified 
so  as  to  permit  of  the  appointment  of  such  director,  and  shall  also 
provide  for  monthly  meetings  of  the  board. 

Section  13.     The  public  service  commission  shall  establish  a 
special  department,  to  be  known  as  the  street  railway  depart- 
ment, whose  duty  it  shall  be  to  furnish  the  commission  with  in- 
formation relative  to  the  physical  condition,   service,   manage- 
ment and  operating  efficiency  of  the  street  railway  companies 
under  its  supervision.     If,  at  any  time,  the  commission  receives 
evidence  from  this  department  that  laxity,  carelessness,  ineffi- 
ciency  or  wastefulness  in  the  conduct  of  the  affairs  of  a  company 
which  has  accepted  this  act  as  herein  provided  is  seriously  affect- 
mg  Its  net  income,  the  commission  shall  at  once  inform  the  com- 
pany of  such  evidence  and  of  the  date  of  a  public  hearing  at 
which  both  the  department  and  the  company  shall  be  heard. 
After  such  hearing,  if  the  commission  finds  that  changes  in  the 
conduct  of  the  affairs  of  the  company  are  desirable  in  the  public 
interest,  it  shall  notify  the  company  in  writing  of  such  changes 
and  of  the  time  within  which  they  should  reasonably  be  made. 

Section  14.     In  addition  to  the  amount  appropriated  by  the 
general  court,  the  public  service  commission  may  annually  ex- 


1918.] 


SENATE  —  No.  265. 


97 


pend,  in  the  performance  of  its  duties  under  this  act,  an  amount 
not  exceeding  two  per  cent  of  the  amount  expended  and  charged 
to  operating  expense  in  the  last  preceding  calendar  year  for 
superintendence  and  salaries  and  expenses  of  general  officers  and 
general  office  clerks  by  the  street  railway  companies  under  its 
supervision.  Within  thirty  days  after  this  act  takes  effect,  and 
on  or  before  the  first  day  of  April  in  each  succeeding  year,  the 
public  service  commission  shall  submit  to  the  tax  commissioner  a 
statement  of  the  amount  required  for  this  purpose,  and  within 
ninety  days  thereafter  the  tax  commissioner  shall  assess  upon 
each  of  said  street  railway  companies  its  share  of  such  amount  in 
proportion  to  its  operating  revenue  for  the  last  preceding  year; 
and  such  assessment  shall  be  collected  in  the  same  manner  as 
taxes  upon  corporations.  Of  the  amount  so  assessed  and  col- 
lected, any  balance  remaining  on  the  thirtieth  day  of  November 
in  any  year  shall  be  carried  forward  to  the  next  year,  and  shall 
be  taken  into  account  by  the  public  service  commission  in  deter- 
mining the  total  amount  required  for  that  year. 

Section  15.  Any  company  desiring  to  accept  the  provisions 
of  this  act  may  apply  to  the  public  service  commission  to  deter- 
mine the  amount  of  its  invested  capital,  and  upon  such  determi- 
nation such  company  may  accept  this  act  by  filing  with  the 
public  service  commission  its  election  so  to  do  authorized  by  a 
vote  of  not  less  than  the  holdings  of  a  majority  of  its  capital 
stock  and  (a)  evidence  satisfactory  to  the  commission  that  it  has 
or  will  provide  the  reserve  fund  mentioned  in  section  six  hereof; 
and  (6)  evidence  satisfactory  to  the  commission  that  it  has  or 
will  provide  the  additional  money  by  the  issue  of  additional 
bonds  or  stock  referred  to  in  section  ten  hereof.  Upon  the  filing 
of  such  acceptance  it  shall  be  the  duty  of  the  commission  to  de- 
termine from  time  to  time  the  amount  which  the  company  shall 
set  aside  or  expend  for  depreciation,  obsolescence  or  for  taking 
care  of  losses  occasioned  by  sold,  destroyed  or  abandoned  prop- 
erty. 

Section  16.     This  act  shall  take  effect  upon  its  passage. 


Date  Due 


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